Mike is creating next year's budget for Centre Corporation. He estimates that next year's sales volume will be 5% higher than this year and that the selling price per unit will remain at $75 per unit. He estimates that cost of goods sold will be $40 per unit, based on a purchase agreement the company has signed with its supplier. The company has done business with the supplier for many years. In creating the budget, which of the following tasks is most likely to be open-ended?
A) Calculating budgeted sales volume
B) Determining that sales volume will grow by 5%
C) Calculating budgeted cost of goods sold
D) Determining that cost of goods sold per unit will be $75 per unit

Question

Quizplus · Accepted Answer

Calculating budgeted sales volume and budgeted cost of goods sold are straightforward calculations based on the given information. Determining cost of goods sold per unit will be $75 per unit is not possible as this is the selling price per unit, not the cost. However, determining that sales volume will grow by 5% is open-ended as it involves predicting future market conditions and factors that may affect sales growth.

Mike Is Creating Next Year's Budget for Centre Corporation