LO 11.2Assume a company is going to make an investment of $450,000 in a machine and the following are the cash flows that two different products would bring in years one through four. Which of the two options would you choose based on the payback method? Option A, Product A                                         Option B, Product B $190,000                                                           $150,000 190,000                                                               180,000 60,000                                                                   60,000 20,000                                                                   70,000

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.