Final answer:
The operating budget includes the production budget which is part of the operating budget focused on the estimated manufacturing requirements. Other options like capital budget and cash budget are separate components of the broader budgeting framework. A budget deficit is the annual shortfall between revenues and expenditures.
Step-by-step explanation:
The operating budget includes various components related to the organization's expected operations for the upcoming fiscal period. Specifically, the operating budget comprises the estimated revenue from sales and the expected expenses for operating the business, including cost of goods sold (COGS), operating expenses, and overheads. However, when it comes to the choices provided in the question, the correct answer is d. production budget. This component of the operating budget estimates the number of units that must be manufactured to meet sales goals and to provide for adequate inventory levels.
The other components listed, such as the capital budget, cash budget, budgeted balance sheet, and budgeted cash flow statement, serve different functions within the broader budgeting process. The capital budget typically includes plans for significant asset purchases or investments in long-term projects. The cash budget details how the company expects to manage its cash flow and maintain adequate liquidity. The budgeted balance sheet provides a projection of the company's financial position at the end of the budget period, considering the expected assets, liabilities, and owner's equity. Lastly, the budgeted cash flow statement forecasts the expected cash inflows and outflows over the budget period, influencing the company's cash position.
Regarding the question about a deficit, this refers to the annual budget shortfall between revenues and expenditures, hence the correct choice is b. the annual budget shortfall between revenues and expenditures. This concept is critical in understanding national economics, where a budget deficit occurs if the government spends more than it collects in taxes and other revenues over a fiscal year.