41.
The concept of a standard used for planning and control purposes is most like a:
42.
Standards are most appropriately used to:
43.
Standards are likely to be most useful when expressed in:
44.
Developing a standard cost for a product or service will usually involve:
45.
Once standard costs for products or services have been developed:
46.
The kind of standard that is most useful for planning and control is:
47.
Standard costing is developed and used for:
48.
The advantage of a continuous budget is:
49.
Once the budgeted income statement is prepared, the __________ budget must be
prepared prior to the preparation of the budgeted balance sheet.
50.
Which of the following budgets must be completed before a budgeted income statement
can be prepared?
51.
A cash budget would include:
52.
The kind of standard that will almost never be achieved and results in an unrealistic
performance target is:
53.
Establishing the standard cost for a unit of product involves:
54.
Once the standard cost for a unit of product is determined:
14–28
55.
In addition to developing the standard cost for a unit of product, organizations may
determine standards for such activities as:
Essay Questions
14–29
56.
Breaded Oak, Inc. has a policy that requires 20 percent of the expected sales of its product
to be on hand at the end of the prior month. Forecasted sales, in units, for the months of
January through April are as follows:
January
36,000 units
February
42,000 units
March
58,000 units
April
52,000 units
(a.) Calculate the number of units planned for ending inventory for January, February, and
March.
(b.) Calculate the number of units budgeted to be produced in January, February, and
March.
14–30
57.
Pinedale, Inc. makes wooden tables. Each table requires 25 pounds of lumber to produce.
The sales forecast for May is 3,200 tables. Estimated beginning and desired ending
inventories for May are the following:
Estimated
Beginning
Desired
Ending
Inventory
Inventory
Tables
1,000
1,440
Lumber
(pounds)
16,000
18,500
(a.) Calculate the number of tables to be produced in May.
(b.) Calculate the number of pounds of lumber to be purchased in May.
Beginning inventory
14–31
14–32
58.
Aborkian Co. is forecasting sales of 75,000 units of product for November. To make one
unit of finished product, seven pounds of raw materials are required. Actual beginning and
desired ending inventories of raw materials and finished goods are:
November 1
November 30
(Actual)
(Desired)
Raw materials
(pounds)
91,400
86,400
Finished goods
8,500
9,600
(a.) Calculate the number of units of product to be produced during November.
(b.) Calculate the number of pounds of raw materials to be purchased during November.
Beginning inventory, Finished
Goods
8,500
Goods available for sale
Ending inventory, Finished Goods
Beginning inventory, Raw
Materials
Raw materials available for use
Ending inventory, Raw Materials
14–34
59.
Pacesetters, Inc., has actual sales for July and August and forecasted sales for September,
October, November, and December as follows:
Actual:
July
5,900 units
August
6,200 units
Forecast:
September
6,000 units
October
6,800 units
November
5,600 units
December
6,100 units
(a.) The firm’s policy is to have finished goods inventory on hand at the end of the month
that is equal to 70 percent of the next month’s sales. It is currently estimated that there
will be 4,200 units on hand at the end of August. Calculate the number of units to be
produced in each of the months of September, October, and November.
(b.) Each unit of finished product requires 6.5 pounds of raw materials. The firm’s policy is
to have raw material inventory on hand at the end of each month that is equal to 60
percent of the next month’s estimated usage. It is currently estimated that 26,000 pounds
of raw materials will be on hand at the end of August. Calculate the number of pounds of
raw materials to be purchased in each of the months of September and October.
Forecast
available
Units Sold