The number of units included in the production budget:
A) are always the same as the number of units in the sales budget.
B) depends on the raw materials purchases budget.
C) is based on the number of units in the sales budget, and increased for increases in the selling and administrative expense budget to account for increased demand.
D) may differ from the number of units in the sales budget, depending on ending inventory goals.

Question

Quizplus · Accepted Answer

The number of units included in the production budget may differ from the number of units in the sales budget, depending on ending inventory goals. This means that the production budget takes into account the desired level of ending inventory, which may be more or less than the amount needed to meet sales demand. Therefore, option D is the correct answer.

The Number of Units Included in the Production Budget