Which figure does the direct materials budget take directly from the production budget?

• A. The amount of direct labor hours required
• B. The total cost of direct materials used
• C. The number of units to be sold
• D. The number of units to be produced

Answer: (D)

Verified step by step guidance

1. Understand the purpose of the direct materials budget: It is used to estimate the quantity and cost of direct materials required for production during a specific period.
2. Recognize the relationship between the production budget and the direct materials budget: The production budget determines the number of units to be produced, which directly impacts the calculation of required direct materials.
3. Identify the key input from the production budget: The direct materials budget takes the 'number of units to be produced' from the production budget as its starting point.
4. Calculate the required direct materials: Multiply the number of units to be produced by the quantity of direct materials needed per unit. For example, if each unit requires 2 pounds of material, and 1,000 units are to be produced, the total material required is 2,000 pounds.
5. Adjust for inventory considerations: Add the desired ending inventory of direct materials and subtract the beginning inventory to determine the total direct materials to be purchased.