Multiple Choice
If a company offers a 30\% sales discount on a product originally priced at \$10, what is the net sales amount after the discount?
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4. Merchandising Operations
Net Sales
Multiple Choice
Which of the following budgets is directly based on information from the sales budget?
A
Cash budget
B
Production budget
C
Capital expenditures budget
D
Direct materials budget
Verified step by step guidance1
Understand the purpose of the sales budget: The sales budget estimates the expected sales in units and dollars for a specific period. It serves as the foundation for other budgets in the budgeting process.
Recognize the relationship between the sales budget and the production budget: The production budget is directly influenced by the sales budget because it determines the number of units that need to be produced to meet sales demand while considering inventory levels.
Identify the formula for the production budget: The production budget is calculated using the formula:
Explain why other budgets are not directly based on the sales budget: The cash budget, capital expenditures budget, and direct materials budget are influenced by other factors, such as production needs, financing decisions, and material requirements, rather than being directly derived from the sales budget.
Conclude that the production budget is the correct answer: Since the production budget relies directly on the sales budget to determine the number of units to produce, it is the budget most closely tied to the sales budget.
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