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.

Question

Quizplus · Accepted Answer

A production budget contributes to scheduling labour requirements by determining how much of each product needs to be produced and when, which in turn helps determine the necessary labour hours and when they are needed. Choices A, B and D are incorrect because a production budget does make provision for determining what products will be made, is based on projected purchases as well as available production capacity, and is used to review available production capacity.

A Production Budget