Budgeting for Production (I

question 21

Multiple Choice

Budgeting for production (i.e., units to be produced in an upcoming budget period) :

• A) Is simply an extension of the sales forecast.
• B) Is prepared after the materials purchases budget is prepared.
• C) Involves the sales budget and both beginning and ending finished goods inventory amounts.
• D) Is not needed under a JIT production philosophy.
• E) Is normally the first major step in the master budgeting process.

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Definitions:

Expected Rate of Return

The expected rate of return is a forecasted percentage of the amount of profit or loss an investment is predicted to earn over a specific period, based on historical data or statistical analysis.

Patents

Legal documents that grant inventors exclusive rights to their inventions for a certain period, preventing others from making, using, or selling them without permission.

Imitation

The act of copying or closely replicating the products, services, or processes of competitors or industry leaders.

Marginal Utility

The extra satisfaction or utility gained by consuming one more unit of a good or service.