The two main problems in the preparation of a production budget: I. It lays down the revenue goals of the enterprise. II. Determining the annual output required. III. Prorating the annual output required throughout the year. IV. Estimate of the total volume of production product-wise and week or month-wise.

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II & III Explanation: The production budget’s main problems are determining the annual output required and prorating that annual output throughout the year (scheduling monthly/weekly production) to match sales, capacity and inventory needs.

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