The Production Budget Is Based on Sales Projections Plus an Estimate

question 34

True/False

The production budget is based on sales projections plus an estimate of desired ending finished goods inventory,less beginning finished goods inventory.

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Definitions:

Weighted-Average Method

The weighted-average method is an inventory costing method that assigns a weighted average cost to the inventory items based on the cost of goods available for sale and the units available.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Materials Cost

The cost of materials that are used in the production of goods; a component of the total cost of goods sold.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold based on the average cost of all goods available for sale during the period.