Answer (C) is correct . Following the preparation of the sales budget, all other budgets are prepared based on the assumptions used in the sales budget. For this reason, the sales budget is the most difficult to prepare because there are no internal figures to use as a guide. Sales are based on the desires of consumers and the current business climate.
Answer (A) is incorrect because The production budget is based on the sales budget.
Answer (B) is incorrect because Expense budgets are based on sales and production budgets.
Answer (D) is incorrect because The manufacturing overhead budget is based on the production budget.
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