B C D $ 145,500 Cabot Co. Cost of Goods Sold Budget For the Month Ending July 31 4 Finished goods inventory, July 1 5 Direct materials: 6 Direct materials inventory, July 1 (Note A) 7 Direct materials purchases 8 Cost of direct materials available for use 9 Direct materials inventory, July 31 (Note B) 10 Cost of direct materials placed in production 11 Direct labor 12 Factory overhead 13 Cost of goods manufactured 14 Cost of finished goods available for sale 15 Finished goods inventory, July 31 16 Cost of goods sold $ 23,000 539,080 $562,080 (17,000) $545,080 500,560 299,000 1,344,640 $1,490,140 (112,500) $1,377,640 17 Note A: Material A 4,000 lbs. at $4.00 per lb. Material B 3,500 lbs. at $2.00 per lb. Direct materials inventory, July 1 $16,000 7,000 $23,000 Note B: Material A 3,000 lbs. at $4.00 per lb. Material B 2,500 lbs. at $2.00 per lb. Direct materials inventory, July 31 $12,000 5,000 $17,000 Discussio cussion Questions 1. What are the the 2. Briefly describe are the three major objectives of budgeting? fly describe the type of human behavior problems might arise if budget goals are set too tightly. what behavioral problems are associated with setting a budget too loosely? What behavioral problems are associated with establiek ing conflicting goals within the budget? appropriate? Under what circumstances would a static budget be 7. Why should the production requirements set forth in the production budget be carefully coordinated with the sales budget? 8. Why should the timing of direct materials purchases be closely coordinated with the production budget? 9. a. Discuss the purpose of the cash budget. b. If the cash for the first quarter of the fiscal year indi- cates excess cash at the end of each of the first two months, how might the excess cash be used? 10. Give an example of how the capital expenditures budget affects other operating budgets. How does software aid firms in the budgeting process