- Questions 1. What is participative budgeting? What are is potential benefits? What are its potential disadvantages? 2. What is budgetary slack? What incentive do managers have to create budgetary siack? 3. Distinguish between a master budget and a sales forecast. 4. What budget is the starting point in preparing the master budget? What may result if this budget is inaccurate? 5. Indicate the supporting schedules used in preparing a budgetad income statement through gross profit for a manutacturer. II. Exorcises 1. Delta Manufacturing has budgeted the following unit saies Of the units budgeted, 40% are sold by the Coastal Dwision at an average price of $15 per unit and the remainder are sold by the Central Bivision at an average price of $12 per unit Instructions Prepare separate sales budgets for each division and for the company in total fo the second quarter of 2020 . 2. Tall Oak, Inc. produces rulers from plastic resin. Tall Oak has estimated production and sales of rulers in units for the next 2 months as: Each ruler requires 0.25 pounds of resin. The cost of resin is $4.50 per pound. Tall Oak wants to have 20% of the next month's materials requirements on hand at the end of each month. Instructions Prepare a direct materials purchases budget for the month of May. 3. Pulham Company is preparing its direct labor budget for 2019 from the following nroduction budget based on a calendar year Each unit requires 2 hours of direct labor. The union contract provides for a 10% increase in wage rate to $11 per hour on October 1 . Instructions Prepare a direct labor budget for 2019