Discussion Questions for Mama's Needlework Budget
 
 
 

1. Production Schedule:  Why doesn't the units produced each quarter match the units they plan to sell?
2. Production Schedule:  Why did Mama decide to run low on inventory in Q2? (She likes to keep 1 month's sales in inventory, which is 30 units in Q2, but she only made enough to end up with 25 units)
3. DM Budget:  Why are 15% of Mama's DM purchase paid for in the next quarter?
4. Direct Labor Budget:  If labor costs $4.85 per hour in Q1, why is the labor cost per unit on $0.97?
5. Cash Budget:  Why do you back out depreciation from the cash budget?
6. Cash Budget: Why doesn't the Net Cash from Operations of $93 match the Annual Budget $105?  One reason is that our budget components were only for Product B.  What is the other reason?
7. Cash Budget: Why did they borrow $50 in the first quarter?
8. Cash Budget:  What is Mama's loan balance at the end of the year?
9. Cash Budget: Mama is angry.  She want to take out her profits (probably around $75 after taxes) at the end of the year.  I told her she can only have $25.   Why?