The Direct Material Budget Is Prepared on the Basis of The

question 111

Multiple Choice

The direct material budget is prepared on the basis of the:

• A)cash budget.
• B)master budget.
• C)capital expenditure budget.
• D)production budget.

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Definitions:

Direct Materials

Direct materials refer to the raw materials that become an integral part of the finished product and can be easily traced back to it.

Direct Labor-Hours

Complete work hours of employees directly incorporated in production tasks.

Variable Overhead

Indirect production costs that vary with the level of production, such as electricity costs or materials used in the maintenance of machinery.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as indirect materials, indirect labor, and other overhead costs.