Budget Planning: Inventory, Costing, and Income Statements

Running head: BUDGET PLANNING
Budget Planning
Name of the Student:
Name of the University:
Author’s Note:

1BUDGET PLANNING
Table of Contents
Answer to Question I:......................................................................................................................2
Answer to Question II:.....................................................................................................................2
Answer to Question III:...................................................................................................................3
Requirement 1:.............................................................................................................................3
Requirement 2:.............................................................................................................................3
Requirement 3:.............................................................................................................................5
Answer to Question 4:.....................................................................................................................6
Requirement a:.............................................................................................................................6
Requirement b:.............................................................................................................................6
Answer to Question 5:.....................................................................................................................7
Bibliography:...................................................................................................................................8

2BUDGET PLANNING
Answer to Question I:
1. Raw materials, work in process and finished goods are the three types of inventory, held
by the manufacturing companies.
2. A manufacturer of automobiles, Toyota, classifies steel, glass and plastic as raw material
inventory.
3. Cost of goods sold is not shown in the balance sheet for any type of companies.
4. The only difference in the balance sheets of service businesses, manufacturing businesses
and merchandising businesses relates to closing inventory.
Answer to Question II:
A. Value Chain: The sequence of activities that adds value to a firm’s product or service
B. Direct Materials: Materials that become a physical part of finished product and whose
costs are separately and conveniently traceable to the finished products
C. Work in process inventory: Goods that are in the manufacturing process are not yet
complete
D. Materials Inventory: Raw materials on hand for use in the manufacturing process
E. Finished Goods Inventory: Completed goods that have not yet been sold
F. Contribution Statement: An income statement format that is geared to cost behaviour
rather than costs organized by function