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Chapter 20: 20-2QS-5 (page 913)

For each of the following items 1 through 6, indicate yes if it describes a potential benefit of budgeting or no if it describes a potential negative outcome of budgeting.

5. Budgets can lead to excessive pressure to meet budgeted results

Short Answer

Expert verified

No

Step by step solution

01

Introduction

Budgeted results are those outcomes of an organization that are achieved by the employers and the firm's employees, keeping in mind budget allocation.

02

Reason

A budget does not lead to extensive pressure on the management of an organization to meet the goals and objectives of the firm so that it matches the budgeted results. Due to a change in the market performance, the results can be affected positively or negatively.

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Most popular questions from this chapter

Electro Company budgets production of 450,000 transmissions in the second quarter and 520,000 transmissions in the third quarter. Each transmission requires 0.80 pounds of a key raw material. The company aims to end each quarter with an ending inventory of direct materials equal to 20% of next quarter’s budgeted materials requirements. Beginning inventory of this raw material is 72,000 pounds. Direct materials cost $1.70 per pound. Prepare a direct materials budget for the second quarter.

Zortek Corp. budgets production of 400 units in January and 200 units in February. Each finished unit requires five pounds of raw material Z, which costs $2 per pound. Each month’s ending inventory of raw materials should be 40% of the following month’s budgeted production. The January 1 raw materials inventory has 130 pounds of Z.

Prepare a direct materials budget for January

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