What Is the Starting Point in Preparing a Master Budget

question 9

Multiple Choice

What is the starting point in preparing a master budget?

• A)the production budget
• B)the sales budget
• C)the direct labour budget
• D)the purchases budget

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Definitions:

Conversion Cost

The total cost of converting raw materials into finished products, combining both direct labor and manufacturing overhead.

Equivalent Units

A measure used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

Factory Overhead

All indirect costs associated with manufacturing, including indirect materials, indirect labor, and other expenses necessary for the production process.

Cost Of Production Report

A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.