There are various budgets within the master budget cycle. One of these budgets is the production budget. Which one of the following best describes the production budget?

Answer (D) is correct. A production budget is based on sales forecasts, in units, with adjustments for beginning and ending inventories. It is used to plan when items will be produced. After the production budget has been completed, it is used to prepare materials purchases, direct labor, and factory overhead budgets.