In what order are the following budgets prepared? IS.budgeted income statement
P.production budget
SA.selling and administrative budget
MP.materials purchases budget
A)SA, P, MP, IS
B)P, MP, IS, SA
C)P, MP, SA, IS
D)MP, P, SA, IS

Question

Quizplus · Accepted Answer

The production budget is prepared first as it outlines the production goals for the period. Next, the materials purchases budget is prepared as it is dependent on the production budget. The selling and administrative budget is then prepared to determine the expected costs related to selling and administrative activities. Finally, the budgeted income statement is prepared using the information from the previous budgets to project the expected financial performance. Therefore, the correct order is P, MP, SA, IS.

In What Order Are the Following Budgets Prepared? IS