ocos 1 Which of the following is not a benefit of budgeting

ocos 1. Which of the following is not a benefit of budgeting? E maxa A. It forces managers to look to the future B. It plays an important role in communication within the organization C. It serves an important role in motivating and rewarding employees D. It builds organizational slack 2. Which of the following statements about employee motivation is true? A. A budget that is too easy to achieve is more likely to motivate than a budget that is too difficult or that is tight but attainable. B. A budget that is too difficult to achieve is more likely to motivate than a budget that is too easy or C. A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too D. Budgets are difficult to use for motivation. that is tight but attainable. difficult to achieve. Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Companys ending finished goods inventory policy is 10% of the following month\'s sales. March 1 inventory is projected to be 1.400 units. How many units will be produced in March? 3. A. 10,000 B. 9,900 C. 13,000 D. 10,100

Solution

1. D. It builds organizational slack.

When a manager creates a budget that is too easy to attain, organizational slack occurs.

2. C. A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too difficult to achieve.

3. B. 9,900

Budgeted production in March = March Sales + Desired Ending Inventory - Beginning Inventory = 10,000 units + 1,300 units ( 13,000 x 10%) - 1,400 units = 9,900 units.