Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 212

Which of the following is a key factor in the development of a production budget for a manufacturing organization?

Answer options

• A. Direct materials units required.
• B. Estimated ending unit inventory.
• C. Projected sales revenue.
• D. Variable overhead costs.

Correct answer: B

Explanation

The correct answer is B, as the estimated ending unit inventory helps determine how many units need to be produced to meet sales demands and maintain inventory levels. While direct materials, projected sales revenue, and variable overhead costs are important considerations, they do not directly impact the quantity of product to be manufactured in the same way that ending inventory does.