Final answer:
The production cost budget does not identify how each product is manufactured; it focuses on the costs associated with producing a product, not the detailed manufacturing process.
Step-by-step explanation:
The statement that the production cost budget identifies how each product is manufactured is FALSE. A production cost budget is primarily concerned with the costs associated with producing a product, which includes how many inputs are needed and what those inputs cost.
However, the detailed process of how a product is manufactured is more accurately described by the firm's production function, which specifies the exact combination of labor, physical capital, and technology used in production.
The cost function that was initially mentioned outlines the relationship between production costs and the output a firm generates. The method of production, or production technology, will differ based on the industry and the specific product being produced.
For example, the costs involved in producing cars are substantially different from the costs involved in producing computer software, haircuts, or fast-food meals due to the varying production methods and resources used.