The number of units in the sales budget and the production budget may differ because of a change in:
A)direct material inventory levels.
B)sales returns and allowances.
C)overhead charges.
D)finished goods inventory levels.

Question

Quizplus · Accepted Answer

The number of units in the sales budget and the production budget may differ because of changes in the finished goods inventory levels. If the finished goods inventory levels are high, the production may need to slow down to avoid excess inventory. On the other hand, if the finished goods inventory levels are low, the production may need to be increased to meet the demand. Therefore, the production budget may need to be adjusted accordingly to reflect the changes in the finished goods inventory levels.

The Number of Units in the Sales Budget and the Production