MN10668 Budgeting

Which is the mostly likely purpose of budgeting?

• Planning and control of an organisation's income and expenditure

• Preparation of a five-year business plan

• Company valuation

• Assess the non-financial performance of an organisation

Calculate the production budget from the following data: sales 89,350 units; opening inventory 23,864 units; closing inventory 33,156 units.

• 80,058 units

• 146,370 units

• 32,330 units

• 98,642 units

A business plans to make 15,000 coats per annum, each taking the 1.5 direct labour hours. If the direct labour rate is £8 per hour and a pay rise of 15% is awarded halfway through the year, what is the total annual direct labour budget?

• £120,000

• £193,500

• £180,000

• £207,000

Which of the following statements can be considered to be an advantage of a bottom-up budget?

• Uses the knowledge of all staff to build a fair budget

• The cheapest method of producing a budget

• Reduces the level of budget negotiation between staff

• Prevents slack being built into budgets

A crockery company makes china cups and saucers. How much clay would they need to buy if:

- a cup uses 100g of clay

- a saucer uses 150g of clay

- it plans to make 450,000 cups and 280,000 saucers

- there is no opening inventory

- it would like to have closing inventories of 4,000kg of clay?

• 83,000 kg

• 99,500 kg

• 87,000 kg

• 91,000 kg