Which of the Following Budgets Would Be Prepared by Both

question 35

Multiple Choice

Which of the following budgets would be prepared by both manufacturing companies and merchandising companies?

• A) Production budgets
• B) Direct material purchases budget
• C) Sales budget
• D) Manufacturing overhead budget

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than its trade partners.

Heckscher-Ohlin Theorem

A theory that explains the existence of a country’s comparative advantage by its factor endowments: A country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product.

Resource Allocation

The process of assigning and managing assets in a manner that supports an organization's strategic goals.

Resource Constraints

Limitations on the availability of resources, which can restrict output, growth, and efficiency.