Which of the following best describes the order in which budgets should be prepared when developing the annual master operating budget?
A) Production budget, direct material budget, revenue budget.
B) Production budget, revenue budget, direct material budget.
C) Revenue budget, production budget, direct material budget.
D) Revenue budget, direct material budget, production budget.

Question

Quizplus · Accepted Answer

The revenue budget is typically prepared first to estimate the total sales for the period. Based on the sales forecast, the production budget is then prepared to determine the number of units that need to be produced. Finally, the direct material budget is prepared, which is dependent on the production budget, to estimate the materials required for production.

Which of the Following Best Describes the Order in Which