Caplico Company has prepared the following sales budget:
Month Budgeted Sales
March $200,000
April 180,000
May 220,000
June 260,000
Cost of goods sold is budgeted at 60% of sales and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?
a.
$52,000
b.
$26,400
c.
$43,200
$31,200
2. Which of the following statements is true of the budgeting process?
a.
It includes qualitative targets of the company, not just quantitative.
b.
It is a continuous process.
c.
It shows the actual performance of the business.
d.
Its success is not dependent on human behavior.
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