Answer (D) is correct . The sales budget is the first step in the operating budget process because it is needed to prepare all of the other budgets. For example, the production budget cannot be prepared until the sales department has determined how many units are needed.
Answer (A) is incorrect because The production budget depends on the sales budget.
Answer (B) is incorrect because The direct materials budget depends on the production budget.
Answer (C) is incorrect because Selling and administrative costs are dependent on projected sales.
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