Question

Which of the following statements is true? a. The production budget is not converted into dollars. b. The sales budget includes both units and dollars. c. The overhead budget is typically composed of variable overhead and fixed overhead. d. The direct labor budget uses an average wage rate for direct labor. e. All of these choices are correct.

Answer 1

Answer:

e. All of these choices are correct.

Explanation:

Note:

Statement a. about production budget is correct as the production budget only estimates number of units to be produced, in quantity and not in dollars and therefore is not converted into dollars.

Statement b. about sales budget is also correct as it shows the quantity in units and also in value.

Statement c. about overhead budget is also correct as the budget segregates variable and fixed overheads properly.

Statement d. about labor budget is correct, as in this budget an average rate is used for calculating the expenses.

Therefore all of the above is correct.