Chapter 8, Problem 8.2E

To determine

Concept Introduction:

A budget is a financial plan for a future period. The budget is prepared usually for a financial year. Budgets can be prepared for revenue and expenses. Budgets help the company to plan for future income and expenses and evaluate business performance.  

A production budget is prepared to plan the required units of production. Required production units are calculated on the basis of expected sales units and desired inventories.

To prepare: The production budget.