Final answer:
False The number of direct labor hours for production is determined by the labor budget, not the production budget, which is a common misconception.
Step-by-step explanation:
The statement that the number of direct labor hours needed for production is obtained from the production budget is false. The production budget determines the number of units to be produced, not the direct labor hours.
Direct labor hours are calculated based on the production requirements and labor efficiency, which is reflected in the labor budget or direct labor budget.
The production function, particularly when ‘inverted’ to show L = f(Q), helps to determine the number of workers (L) required for any given quantity of output (Q).
This function can be used to establish production costs, considering wages, benefits, and technology that could be used, as shown in decisions where firms must choose between labor and capital (machines) in light of union wage demands.