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Can you help me to understand this question:
In a situation where are no production resource limitations, which of the following items of information must be available for the production budget to be completed?
a)Sales Volume from the sales budget
b)Material purchases from the purchases budget
c)Budgeted change in finished goods inventory
d)Standard direct labour cost per unitThanks!
The production budget is simply a budget of the number of units to be produced.
(materials purchases would come later, then we know the number to be produced. Same for labour costs).However, in order to know how many we are going to produce we need first to know how many we expect to sell (a) and whether we intend to change the level of inventory (c).
Once we know (a) and (c) we can then calculate how many we need to produce.
interesting question, i can only discuss it:
first, u need all 4 items to complete the bud. but the question asks doe one item that is needed to complete …..so
changes in the inv is the only needed piece of info.
when starting off with a bud, u wd need sales vol, material rate and labor rate. thats like … duh! and u wd begin with knowing these 3 items.
since there rno limiting factors, all need to “complete” r the changes in inv.
do let me know the answer …:)
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