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Patrick inc makes industrial solvents

07/01/2021 Client: saad24vbs Deadline: 7 Days

Assignment: Chapter 9 LO 1, 2


1. Preparing a Sales Budget


Patrick Inc. sells industrial solvents in five-gallon drums. Patrick expects the following units to be sold in the first three months of the coming year: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-21.e.jpg


The average price for a drum is $38.


Prepare a sales budget for the first three months of the coming year, showing units and sales revenue by month and in total for the quarter. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Sales Budget


For the Coming Quarter


January


February


March


1st Quarter Total


Units










Price


$


$


$


$


Sales


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


2. Preparing a Production Budget


Patrick Inc. makes industrial solvents. In the first four months of the coming year, Patrick expects the following unit sales: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-22.e.jpg


Patrick's policy is to have 25 percent of next month's sales in ending inventory. On January 1, it is expected that there will be 4,600 drums of solvent on hand.


Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.


Patrick Inc.


Production Budget


For the Coming Quarter


January


February


March


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


3. Preparing a Direct Materials Purchases Budget


Patrick Inc. makes industrial solvents sold in five-gallon drums. Planned production in units for the first three months of the coming year is:


January


40,000


February


50,000


March


65,000


Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.


1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon.


Ending inventory for December: _________________ gallons


Ending inventory for January: _________________ gallons


Ending inventory for February: _________________ gallons


Beginning inventory for January: _________________ gallons


2. Prepare a direct materials purchases budget for chemicals for the months of January and February. Round Gallons per unit to one decimal place. Round Price per gallon to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Materials Purchases Budget - Chemicals in Gallons


For the Months of January and February


January


February


Production in units






Gallons per unit






Gallons for production






Desired ending inventory






Needed






Less: Beginning inventory






Direct materials to be purchased






Price per gallon


$


$


Dollar purchases


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole drum.


Ending inventory for December: _________________ drums


Ending inventory for January: _________________ drums


Ending inventory for February: _________________ drums


4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Drums per unit to one decimal place. Round Price per drum to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Materials Purchases Budget - Drums


For the Months of January and February


January


February


Production in units






Drums per unit






Drums for production






Desired ending inventory






Needed






Less: Beginning inventory






Direct materials to be purchased






Price per drum


$


$


Dollar purchases


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


4.


eBookeBookeBookeBookeBookeBookeBookeBookeBook VideoVideoVideoVideoVideoVideoVideoVideoVideo


Cornerstone Exercise 9-24 (Algorithmic) Preparing a Direct Labor Budget


Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is:


January


40,000


February


55,000


March


60,000


Each drum of industrial solvent takes 0.3 direct labor hours. The average wage is $17.10 per hour.


Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Labor Budget


For the Coming First Quarter


Direct Labor Budget:


January


February


March


Total


Units to be produced










Direct labor hrs per unit










Total direct labor hrs










Wage rate


$


$


$


$


Direct labor cost


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


5.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-35 Production Budget


Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg


The vice president of sales believes that the projected sales are realistic and can be achieved by the company.


Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 2012 was 340 boxes. The company’s policy is to have 20 percent of the next quarter’s sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company’s policy is to have 30 percent of the next quarter’s sales of S12L5 in ending inventory.


Prepare a production budget for S12L7 for each quarter for 2012 and for the year in total.


Stillwater Designs


Production Budget for S12L7


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


Sales












Desired ending inventory












Total needs












Less: Beginning inventory












Units produced














http://sjc.cengagenow.com/media/img/onepixel.gif


Prepare a production budget for S12L5 for each quarter for 2012 and for the year in total.


Stillwater Designs


Production Budget for S12L5


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


Sales












Desired ending inventory












Total needs












Less: Beginning inventory












Units produced














http://sjc.cengagenow.com/media/img/onepixel.gif


6.


eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet


Exercise 9-36 (Algorithmic) Production Budget and Direct Materials Purchases Budgets


Smee Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:




Unit Sales


Dollar Sales ($)


January


60,000


$114,000


February


70,000


133,000


March


80,000


152,000


April


50,000


95,000


Company policy requires that ending inventories for each month be 10 percent of next month's sales. At the beginning of January, the inventory of peanut butter is 35,000 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met on January 1.


1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.


Smee Inc.


Production Budget


For the First Quarter of the Year


January


February


March


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


2a. Prepare a direct materials purchases budget for jars for the months of January and February. Do not include a multiplication symbol as part of your answer.


Smee, Inc.


Direct Materials Purchases Budget for Jars


For January and February


January


February


Total


Production








Jar








Jars for production








Desired ending inventory








Total needs








Less: Beginning inventory








Jars purchased










http://sjc.cengagenow.com/media/img/onepixel.gif


2b. Prepare a direct materials purchases budget for peanuts for the months of January and February. Do not include a multiplication symbol as part of your answer.


Smee, Inc.


Direct Materials Purchases Budget for Peanuts


For January and February


January


February


Total


Production








Ounces








Ounces for production








Desired ending inventory








Total needs








Less: Beginning inventory








Ounces purchased










http://sjc.cengagenow.com/media/img/onepixel.gif


7.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-37 Production Budget


Pumpro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-37.e.jpg


Company policy requires that ending inventories for each month be 30 percent of next month’s sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 40,000.


Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.


Pumpro Inc.


Production Budget


For the Second Quarter


April


May


June


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


8.


eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet


Exercise 9-38 Direct Materials Purchases Budget


You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.


Fang Company produces decorative plastic items, including hollow plastic pumpkins often used by trick-or-treaters for Halloween. Each pumpkin requires about 5 ounces of plastic costing $0.08 per ounce. Fang molds the plastic into a pumpkin shape and applies decoration to the outside of each pumpkin. Fang has budgeted production of the pumpkins for the next four months as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-38.e.jpg


Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20 percent of the following month’s production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.


Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.


Fang Company


Direct Materials Purchases Budget


For July, August, and September


July


August


September


Total


Units to be produced










Direct materials per unit










Production needs










Desired ending inventory










Total needs










Less: Beginning inventory










Direct materials to be purchased










Cost per ounce


$ 0.08


$ 0.08


$ 0.08


$ 0.08


Total purchase cost


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


9.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-34 Sales Budget


Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg


The vice president of sales believes that the projected sales are realistic and can be achieved by the company.


1. Prepare a sales budget for each quarter of 2012 and for the year in total. Show sales by product and in total for each time period. Do not include a multiplication symbol as part of your answer.


Stillwater Designs


Sales Budget


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


S12L7:


Units












Price


$


$


$


$


$


Sales


$


$


$


$


$


S12L5:


Units












Price


$


$


$


$


$


Sales


$


$


$


$


$


Total sales


$


$


$


$






http://sjc.cengagenow.com/media/img/onepixel.gif


2. How will Stillwater Designs use this sales budget?


The input in the box below will not be graded, but may be reviewed and considered by your instructor. _________________  Assignment: Chapter 9 LO 1, 2


1. Preparing a Sales Budget


Patrick Inc. sells industrial solvents in five-gallon drums. Patrick expects the following units to be sold in the first three months of the coming year: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-21.e.jpg


The average price for a drum is $38.


Prepare a sales budget for the first three months of the coming year, showing units and sales revenue by month and in total for the quarter. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Sales Budget


For the Coming Quarter


January


February


March


1st Quarter Total


Units










Price


$


$


$


$


Sales


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


2. Preparing a Production Budget


Patrick Inc. makes industrial solvents. In the first four months of the coming year, Patrick expects the following unit sales: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-22.e.jpg


Patrick's policy is to have 25 percent of next month's sales in ending inventory. On January 1, it is expected that there will be 4,600 drums of solvent on hand.


Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.


Patrick Inc.


Production Budget


For the Coming Quarter


January


February


March


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


3. Preparing a Direct Materials Purchases Budget


Patrick Inc. makes industrial solvents sold in five-gallon drums. Planned production in units for the first three months of the coming year is:


January


40,000


February


50,000


March


65,000


Each drum requires 6 gallons of chemicals and one plastic drum. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one gallon of chemicals is $2.00. The cost of one drum is $1.60.


1. Calculate the ending inventory of chemicals in gallons for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January? Round your answers to the nearest whole gallon.


Ending inventory for December: _________________ gallons


Ending inventory for January: _________________ gallons


Ending inventory for February: _________________ gallons


Beginning inventory for January: _________________ gallons


2. Prepare a direct materials purchases budget for chemicals for the months of January and February. Round Gallons per unit to one decimal place. Round Price per gallon to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Materials Purchases Budget - Chemicals in Gallons


For the Months of January and February


January


February


Production in units






Gallons per unit






Gallons for production






Desired ending inventory






Needed






Less: Beginning inventory






Direct materials to be purchased






Price per gallon


$


$


Dollar purchases


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


3. Calculate the ending inventory of drums for December of the prior year, and for January and February. Round your answers to the nearest whole drum.


Ending inventory for December: _________________ drums


Ending inventory for January: _________________ drums


Ending inventory for February: _________________ drums


4. Prepare a direct materials purchases budget for drums for the months of January and February. Round Drums per unit to one decimal place. Round Price per drum to the nearest cent. Round Dollar purchases to the nearest dollar. Round all the other values to the nearest whole unit. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Materials Purchases Budget - Drums


For the Months of January and February


January


February


Production in units






Drums per unit






Drums for production






Desired ending inventory






Needed






Less: Beginning inventory






Direct materials to be purchased






Price per drum


$


$


Dollar purchases


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


4.


eBookeBookeBookeBookeBookeBookeBookeBookeBook VideoVideoVideoVideoVideoVideoVideoVideoVideo


Cornerstone Exercise 9-24 (Algorithmic) Preparing a Direct Labor Budget


Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is:


January


40,000


February


55,000


March


60,000


Each drum of industrial solvent takes 0.3 direct labor hours. The average wage is $17.10 per hour.


Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer.


Patrick Inc.


Direct Labor Budget


For the Coming First Quarter


Direct Labor Budget:


January


February


March


Total


Units to be produced










Direct labor hrs per unit










Total direct labor hrs










Wage rate


$


$


$


$


Direct labor cost


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


5.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-35 Production Budget


Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg


The vice president of sales believes that the projected sales are realistic and can be achieved by the company.


Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 2012 was 340 boxes. The company’s policy is to have 20 percent of the next quarter’s sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company’s policy is to have 30 percent of the next quarter’s sales of S12L5 in ending inventory.


Prepare a production budget for S12L7 for each quarter for 2012 and for the year in total.


Stillwater Designs


Production Budget for S12L7


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


Sales












Desired ending inventory












Total needs












Less: Beginning inventory












Units produced














http://sjc.cengagenow.com/media/img/onepixel.gif


Prepare a production budget for S12L5 for each quarter for 2012 and for the year in total.


Stillwater Designs


Production Budget for S12L5


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


Sales












Desired ending inventory












Total needs












Less: Beginning inventory












Units produced














http://sjc.cengagenow.com/media/img/onepixel.gif


6.


eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet


Exercise 9-36 (Algorithmic) Production Budget and Direct Materials Purchases Budgets


Smee Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:




Unit Sales


Dollar Sales ($)


January


60,000


$114,000


February


70,000


133,000


March


80,000


152,000


April


50,000


95,000


Company policy requires that ending inventories for each month be 10 percent of next month's sales. At the beginning of January, the inventory of peanut butter is 35,000 jars. Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20 percent of the next month's production needs. That policy was met on January 1.


1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.


Smee Inc.


Production Budget


For the First Quarter of the Year


January


February


March


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


2a. Prepare a direct materials purchases budget for jars for the months of January and February. Do not include a multiplication symbol as part of your answer.


Smee, Inc.


Direct Materials Purchases Budget for Jars


For January and February


January


February


Total


Production








Jar








Jars for production








Desired ending inventory








Total needs








Less: Beginning inventory








Jars purchased










http://sjc.cengagenow.com/media/img/onepixel.gif


2b. Prepare a direct materials purchases budget for peanuts for the months of January and February. Do not include a multiplication symbol as part of your answer.


Smee, Inc.


Direct Materials Purchases Budget for Peanuts


For January and February


January


February


Total


Production








Ounces








Ounces for production








Desired ending inventory








Total needs








Less: Beginning inventory








Ounces purchased










http://sjc.cengagenow.com/media/img/onepixel.gif


7.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-37 Production Budget


Pumpro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-37.e.jpg


Company policy requires that ending inventories for each month be 30 percent of next month’s sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 40,000.


Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.


Pumpro Inc.


Production Budget


For the Second Quarter


April


May


June


Total


Sales










Desired ending inventory










Total needs










Less: Beginning inventory










Units produced












http://sjc.cengagenow.com/media/img/onepixel.gif


8.


eBookeBookeBookeBookeBookeBookeBookeBookeBook SpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheetSpreadsheet


Exercise 9-38 Direct Materials Purchases Budget


You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.


Fang Company produces decorative plastic items, including hollow plastic pumpkins often used by trick-or-treaters for Halloween. Each pumpkin requires about 5 ounces of plastic costing $0.08 per ounce. Fang molds the plastic into a pumpkin shape and applies decoration to the outside of each pumpkin. Fang has budgeted production of the pumpkins for the next four months as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-38.e.jpg


Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 20 percent of the following month’s production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.


Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.


Fang Company


Direct Materials Purchases Budget


For July, August, and September


July


August


September


Total


Units to be produced










Direct materials per unit










Production needs










Desired ending inventory










Total needs










Less: Beginning inventory










Direct materials to be purchased










Cost per ounce


$ 0.08


$ 0.08


$ 0.08


$ 0.08


Total purchase cost


$


$


$


$




http://sjc.cengagenow.com/media/img/onepixel.gif


9.


eBookeBookeBookeBookeBookeBookeBookeBookeBook


Exercise 9-34 Sales Budget


Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows: http://sjc.cengagenow.com/ilrn/books/mhma04h/images/ch09/mhma04h_ch09_ce9-34.e.jpg


The vice president of sales believes that the projected sales are realistic and can be achieved by the company.


1. Prepare a sales budget for each quarter of 2012 and for the year in total. Show sales by product and in total for each time period. Do not include a multiplication symbol as part of your answer.


Stillwater Designs


Sales Budget


For the Year Ended December 31, 2012


1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.


Total


S12L7:


Units












Price


$


$


$


$


$


Sales


$


$


$


$


$


S12L5:


Units












Price


$


$


$


$


$


Sales


$


$


$


$


$


Total sales


$


$


$


$






http://sjc.cengagenow.com/media/img/onepixel.gif


2. How will Stillwater Designs use this sales budget?


The input in the box below will not be graded, but may be reviewed and considered by your instructor. _________________  

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