A Production Budget

question 8

Multiple Choice

A production budget

• A) is based on projected purchases as disclosed by the purchases budget.
• B) does not make provision for production planning by determining what products will be made.
• C) contributes to scheduling labour requirements.
• D) is not used to review available production capacity.

---

Definitions:

Fixed Costs

Financial obligations like rent, salaries, and insurance that do not vary with changes in production or sales figures.

Utilization Rate

Typically refers to the ratio of currently used resources to the total available resources, often used in the context of credit utilization or operational capacity.

Net Income

The total earnings or profit of a person or company after deducting all expenses and taxes.

Variable Costs

Expenses that fluctuate based on the amount of products or services a company generates.