Reference no: EM132899819

Problem 1: Which of the following is not a primary purpose of preparing a budget?

Option 1: To make sure that the company expands its operations

Option 2: To control revenues and expenses during a given period

Option 3: To provide a basis for comparison of actual performance

Option 4: To communicate the company's plans throughout the entire business organization

Problem 2: A company has had stable sales and production for several years. Next year, sales are expected to increase by at least 50%. Assuming that the company maintains its policy for desired ending inventories of finished product and direct materials purchases, what will be the likely effect on the desired ending inventory of finished product?

Option 1: It will be twice the size of the desired ending inventory of raw materials

Option 2: It will decrease

Option 3: It will increase

Option 4: It will stay the same