There Are Various Budgets Within the Master Budget

question 42

Multiple Choice

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 summarizes the costs of producing required units for the budget period.
• B)It details the required raw materials purchases.
• C)It details the required direct labour hours.
• D)It is calculated based on the sales budget, the desired beginning inventory and the desired ending inventory.

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Definitions:

Increase

A situation where there is a rise in magnitude, quantity, or degree.

Quantity Demanded

A specific quantity of a good that buyers are interested in purchasing at a certain price point.

Law of Demand

The principle that, ceteris paribus, there is an inverse relationship between the price of a good and the quantity demanded.

Quantity Demanded

The amount of a product or service consumers are willing to buy at a given price.