Which of the following budgets must managers prepare before they can prepare a direct materials purchases budget?
A)Labor budget
B)Overhead budget
C)Production budget
D)Cost of goods manufactured budget

Question

Quizplus · Accepted Answer

The production budget is the starting point for many other budgets, including the direct materials purchases budget. The production budget outlines the expected units to be produced during a period, which is necessary information for determining the amount of direct materials required. Therefore, managers must prepare the production budget first before they can prepare the direct materials purchases budget. The labor budget and overhead budget are also essential parts of the budgeting process, but they are not required before the direct materials purchases budget. The cost of goods manufactured budget is based on the information provided by the direct materials purchases budget, so it cannot be prepared until after the direct materials purchases budget has been completed.

Which of the Following Budgets Must Managers Prepare Before They