Exam 9: Budgeting, production, cash, and Master Budget

A firm acquires information that can be used to improve decision making from a budgetary system.

Stumble Inc. plans to sell 100,000 units in March and 140,000 units in April. Stumble Inc.'s policy is that 15% of the following month's sales must be in ending inventory. On March 1, 13,400 units were in inventory. It takes 15 minutes of direct labour time to make one unit. Direct labour wages average $20 per hour. Variable overhead is applied at the rate of $3 per direct labour hour. Fixed overhead is budgeted at $44,500 per month. -Refer to the Figure.How many units are budgeted for production in March?

Barkin Company budgeted the following sales in units: Barkin's policy is to have 20% of the following month's sales in inventory.On April 1,inventory equalled 10,000 units.What is May's production in units? April 50,000 May 20,000 June 40,000

One use of budgets is for planning.

You have decided to throw a party next weekend for 20 friends.Your friends are going to bring food,so all you have to have available are the drinks.You estimate that,on average,each person will drink five bottles of soft drinks.Three of your friends will drink only natural soda,so Sulo Ginger Ale should work well for them.For the others,you decide to buy Sulo Cola.You check the refrigerator.You already have eight bottles of Sulo Ginger Ale and 12 bottles of Sulo Cola.Since this is the end of the semester,you decide that you don't really want any of the soft drinks on hand after the party. A. How many bottles of Sulo Ginger Ale do you plan to buy? B. How many bottles of Sulo Cola do you plan to buy?