Page 323 - F2 - MA Integrated Workbook STUDENT 2018-19

Budgeting

Test your understanding answers

Test your understanding 1

D

A manager might build some slack into a budget to provide some ‘leeway’ to
disguise unnecessary spending or to make a performance target easier to
reach.

Test your understanding 2

(a) June = 6,150 cases, July = 7,600 cases

June July August September

Sales 6,000 7,500 8,500 7,000

Closing inventory 750 850 700 650

Opening inventory (600) (750) (850) (700)

Production budget 6,150 7,600 8,350 6,950

Closing inventory for June is calculated as 10% of July sales (7,500 × 10% =
750. All other months are calculated in the same way.

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