Mathematics · Business Mathematics & Budgeting
Consider the following statements regarding corporate budgeting: Statement 1: A Sales Budget is the most critical functional budget in a standard manufacturing setup because it serves as the foundation for all other budgets. Statement 2: The Production Budget is prepared by taking the sales quantity from the sales budget and adjusting it for the desired closing stock of finished goods and the expected opening stock. Statement 3: Performance Budgeting shifts the focus from inputs like salaries and supplies to outputs and outcomes. Based on these principles, which of the following analytical conclusions is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1If the desired closing stock of finished goods increases while sales and opening stock remain constant, the production budget quantity must increase.✓
- 2Performance budgeting focuses purely on the historical cost of items rather than the results achieved.
- 3The sales budget is prepared only after the production budget is finalized.
- 4If the desired closing stock of finished goods increases while sales and opening stock remain constant, the production budget quantity must decrease.
Correct answer
If the desired closing stock of finished goods increases while sales and opening stock remain constant, the production budget quantity must increase.
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