A Significant Difference Between the Direct Material Purchases Budget and the Direct

question 31

Multiple Choice

A significant difference between the direct material purchases budget and the direct labor budget is that the direct material purchases budget

• A)is based on units sold, while the direct labor budget is based on units produced.
• B)considers beginning and ending inventory amounts, which are not part of the direct labor budget.
• C)is constructed for each quarter, while the direct labor budget is constructed for each pay period.
• D)is constructed from the top down, while the direct labor budget uses a bottom-up approach.

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Definitions:

Owner Investment

Capital contributions made by the owner(s) or shareholders into a business, either in cash or other assets, for the purpose of funding operations or expansion.

Capital

The wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

Revenue

Revenue is the total amount of money that a company receives from its activities, usually from the sale of goods and services to customers.

Normal Debit Balance

Refers to the expected debit balance in certain types of accounts, like assets, expenses, and losses, indicating an increase in these accounts.