Question

The production budgets are used to prepare which of the following budgets?

Answer 1

Answer:

b. direct materials purchases, direct labor cost, and factory overhead cost

Explanation:

The production budgets is the budget used for determining the number of units of a product to be manufactured. The production budget captures the estimates of the total production cost and includes elements such as direct materials purchases, direct labor cost, and factory overhead cost.

Operating expenses are expenses incurred during the ordinary course of business outside the manufacturing process.

Sales in unit and dollars are determined by the company's projection and ambition.

The sales estimates determined the production budget considering also the safety stock or closing inventory.

Hence, the right option is b. direct materials purchases, direct labor cost, and factory overhead cost.