# Chapter 20

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question
A July sales forecast projects that 7,700 units are going to be sold at a price of \$12.20 per unit. The management forecasts 15% growth in sales each month. Total July sales are anticipated to be:
7,700 Ć \$12.20 = \$93,940
question
The company wants to end each month with ending finished goods inventory equal to 20% of the next month's sales. Finished goods inventory on June 30 is 1,140 units. The budgeted production units for July are:
July units + 20% of August units - June ending inventory = July production 5,700 units + (6,400 units * .20) - 1,140 units = 5,840 units
question
Each month's ending finished goods inventory should be 40% of the next month's sales. March 31 finished goods inventory is 128 units. A finished unit requires 5 pounds of direct material B at a cost of \$2.00 per pound. The March 31 Raw Materials Inventory has 280 pounds of B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted production for May is:
For sales 360 units For ending inventory (40% * 380) 152 Less beginning inventory (40% * 360) (144 ) To produce 368 units
question
A formal statement of future plans, usually expressed in monetary terms, is a:
Budget.
question
Operating budgets include all the following budgets except the:
Cash budget.
question
The usual starting point for preparing a master budget is forecasting or estimating:
Sales.
question
The master budgeting process typically begins with the sales budget and ends with a cash budget and: