1. Presented below are terms or phrases preceded by letters (a) through (j) and followed by a list of definitions 1 through 10. Match the correct definitions with the terms or phrases by placing the letter of the term or phrase in the answer space provided at the beginning of the definition.

(a) Budget

(b) Capital expenditure budget

(c) Manufacturing budget

(d) Sales budget

(e) Production budget

(f) Cash budget

(g) Budgeted balance sheet

(h) Continuous budgeting

(i) Selling expense budget

(j) Rolling budgets

_____(1.)A plan that lists the types and amounts of selling expenses expected during the budget period.

_____(2.)A plan that shows the predicted costs for direct materials, direct labor, and overhead costs to be incurred in manufacturing the units in the production budget.

_____(3.)An accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period.

_____(4.)A formal statement of future plans, usually expressed in monetary terms.

_____(5.)A plan showing the units of goods to be sold and the sales to be derived; usually the starting point in the budgeting process.

_____(6.)A plan that lists dollar amounts to be both received from disposing of plant assets and spent on purchasing additional plant assets to carry out the budgeted business activities.

______(7.)The practice of preparing budgets for a selected number of several periods and revising those budgets as each period is completed.

______(8.)A plan showing the number of units to be produced each month.

______(9)A plan that shows the expected cash inflows and outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans.

______(10)A new set of budgets added to replace the ones that have lapsed as each budget

2. Indicate the order in which the following budgets would be completed (1 = first and so on)

______ (A) Cash budget

______ (B) Budgeted income statement

______ (C) Sales budget

______ (D) Production budget

______ (E) Operating expense budget

3. Nano, Inc. is preparing its budget for the second quarter. The following sales data have been forecasted:

April

May

June

July

August

Unit sales

640

720

780

620

660

Additional information follows:

Inventory on March 31:

192 units

Desired ending inventory each month:

30% of next month's sales

How many units should be purchased in April, May, and June?How many units should be purchased in the second quarter in total?

4. In preparing a budget for the last three months of the current year, Urban Company is planning the units of merchandise it must order each month. The company's policy is to have 15% of the next month's sales in its inventory at the end of each month. Projected sales for October, November, and December are 27,000 units, 29,500 units, and 32,500 units, respectively. How many units must be ordered in November?