1. Caplico Company has prepared the following sales budget:

Month	Budgeted Sales
March	$200,000
April	180,000
May	220,000
June	260,000

Cost of goods sold is budgeted at 60% of sales and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?

a.

$52,000

b.

$26,400

c.

$43,200

$31,200

2. Which of the following statements is true of the budgeting process?

	a.	It includes qualitative targets of the company, not just quantitative.
	b.	It is a continuous process.
	c.	It shows the actual performance of the business.
	d.	Its success is not dependent on human behavior.