Which of the following budgets should be prepared before the others listed?
A)Cost of goods manufactured budget
B)Cash budget
C)Production budget
D)Overhead budget

Question

Quizplus · Accepted Answer

The production budget should be prepared first as it serves as the basis for many other budgets, including the cost of goods manufactured budget and the cash budget. Without the production budget, it is impossible to determine the required level of materials, labor, and overhead, which are essential for preparing these other budgets. The overhead budget can be prepared next, as it depends on the information gathered in the production budget. Finally, the cost of goods manufactured and the cash budgets can be prepared once the production and overhead budgets have been established.

Which of the Following Budgets Should Be Prepared Before the Others