Questions: The number of units needed to satisfy sales and provide the desired ending inventory is shown on the budget.

The number of units needed to satisfy sales and provide the desired ending inventory is shown on the budget.
Transcript text: The number of units needed to satisfy sales and provide the desired ending inventory is shown on the $\qquad$ budget.
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Solution

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The answer is the third one: production.

Explanation for each option:

  1. Sales: The sales budget typically outlines the expected sales in units or dollars for a specific period. It does not account for the production needed to meet sales and inventory requirements.

  2. Cash: The cash budget focuses on the inflows and outflows of cash, ensuring that a company has enough liquidity to meet its obligations. It does not deal with production or inventory levels.

  3. Production: The production budget is designed to determine the number of units that need to be produced to meet expected sales and to provide for the desired ending inventory. It takes into account the beginning inventory, sales forecasts, and desired ending inventory to calculate the required production.

  4. Direct Materials: The direct materials budget estimates the raw materials needed for production, based on the production budget. It does not directly determine the number of units needed for sales and inventory.

In summary, the production budget is the one that shows the number of units needed to satisfy sales and provide the desired ending inventory.

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