Which of the following alternatives reflects the proper order of preparing components of the master budget? 1. Production budget
2) Sales budget
3) Direct materials budget

Question

Quizplus · Accepted Answer

The sales budget is prepared first because it estimates the number of units expected to be sold, which determines the production needs. Next, the production budget is prepared, which outlines the units that need to be produced to meet sales demands and inventory policies. Finally, the direct materials budget is prepared, which is based on the production budget and specifies the materials that need to be purchased to meet production goals.

Which of the Following Alternatives Reflects the Proper Order of Preparing