Question

In a merchandising company, one of the budgets created is the merchandise purchases budget. The merchandise...

In a merchandising company, one of the budgets created is the merchandise purchases budget. The merchandise purchases budget replaces which of the following budgets when compared to a manufacturing company?

A. Production Budget, Direct Materials Budget, Direct Labor Budget, Manufacturing Overhead Budget

B. Sales Budget, Production Budget, Manufacturing Overhead Budget

C. Production Budget, Direct Materials Budget, Direct Labor Budget, Cash Budget

D. Cash Budget, Production Budget, Manufacturing Overhead Budget

Business   Accounting   
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Answer #1

Answer is option 'A' i.e  Production Budget, Direct Materials Budget, Direct Labor Budget, Manufacturing Overhead Budget

Explanation - In a merchandising company, one of the budgets created is the merchandise purchases budget. The merchandise purchases budget replaces Production Budget, Direct Materials Budget, Direct Labor Budget, Manufacturing Overhead Budget.The remaining budgets of a merchandising company (sales, selling expenses, general and administrative expenses, capital expenditures, cash, income statement, and balance sheet) are the same as those discussed for a manufacturing company.

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