Question

There are various budgets within the master budget. One of these budgets is the production budget. Which on 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 desires ending inventory

D: It summarizes the costs of producing units for the budget period

Answer 1

Ans.	Option C
	*Explanations:
	Production budget is prepared on the basis of sales budget as this budget provides
	the number of units sold then desired ending inventory units are added and
	budgeted beginning inventory units are subtracted from units sold to calculate
	the number of units produced.
	*Other options are incorrect because :
	*Required direct labor hours are calculated in direct labor budget.
	*Raw materials purchase is computed in direct materials budget.
	*Production budget details the number of units produced rather than
	the cost of production.