CAF-7 · Chapter 11 · Question 6 of 15
When preparing a master budget, which functional budget must usually be prepared first because all other budgets are derived from it?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The sales budget
Explanation
Assuming there are no resource constraints, the sales budget is the foundation of the entire master budget. Production levels, raw material purchases, and cash flows are all ultimately dependent on the expected volume of sales.
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