In what order are the following budgets prepared?
IS.Budgeted income statement
P.Production budget
SA.Selling and administrative budget
MP.Materials purchases budget

Question

In what order are the following budgets prepared? 
IS.Budgeted income statement
P.Production budget
SA.Selling and administrative budget
MP.Materials purchases budget

Quizplus · Accepted Answer

The production budget is the first budget to be prepared as it determines the amount of goods that will be produced, which then impacts the materials purchases budget. The materials purchases budget is used to determine how much money will be needed for materials, which then feeds into the selling and administrative budget. Finally, the budgeted income statement can be prepared based on all of the previously determined budgets. Therefore, the correct order is P, MP, SA, IS.

In What Order Are the Following Budgets Prepared