Which of the following is a key factor in the development of a production budget...

A production budget determines the number of units that must be produced to meet expected sales and desired ending inventory levels. The basic formula is budgeted unit sales plus desired ending inventory minus beginning inventory. Estimated ending unit inventory is therefore a key factor in the production budget. Direct materials units required are determined later in the direct materials budget. Projected sales revenue supports the sales budget, not directly the production budget, because production is based on units rather than revenue. Variable overhead costs are considered in manufacturing overhead budgets, not in calculating the number of units to produce. Internal auditors reviewing budgeting should verify links among sales, production, inventory, and materials budgets. Therefore, Option B is correct.