The number of working hours required to satisfy the production budget is shown on the direct material budget.

The number of working hours required to satisfy the production budget is shown on the direct material budget.

(a) True

(b) False.

Answer: (b) False.

The statement is false – The number of working hours that will be needed to meet the figure in the production budget is shown on the direct material budget. Direct material budget as a working document that provides an expected quantity and cost of material that required for the production in a certain period of time. It does not contain any history on the labour hours or within the production budget line. This is usually computed and presented in another budget referred to as the direct labour budget whereby it indicates the working hours needed to complete the achievable production plans. To propose this budget, the company has several factors in mind, such as the amount that can be produced, the number of hours that are available to complete per unit, and the appropriate labour rate to meet the total direct labour that must be supplied to meet the production budget. This is why working hours are not described as being presented on the direct material budget.