Asked by Bianca Benincasa on May 20, 2024
Verified
There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?
A) It details the required direct labor hours.
B) It details the required raw materials purchases.
C) It is calculated based on the sales budget and the desired ending inventory.
D) It summarizes the costs of producing units for the budget period.
Production Budget
An estimate of the total units that must be produced in a given period to meet sales and inventory needs.
Sales Budget
An estimate of the expected sales revenue and selling expenses for a specific period, used for planning and control purposes.
- Acquire knowledge of the components and preparation involved in the production budget.
Verified Answer
JG
Jared GuaschMay 20, 2024
Final Answer :
C
Explanation :
The production budget is calculated based on the sales budget and the desired ending inventory. It outlines the number of units that need to be produced to meet expected sales and have the desired ending inventory levels. It does not detail direct labor hours or raw materials purchases, but it does include information on the cost of producing the units. Therefore, choice C is the best answer.
Learning Objectives
- Acquire knowledge of the components and preparation involved in the production budget.
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