Answer (D) is correct . The components of the operating budget are prepared in the following order:? sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, ending finished goods inventory budget, cost of goods sold budget, and nonmanufacturing budget. This last budget consists of the research and development budget, design budget, marketing budget, distribution budget, customer service budget, and administrative budget.
Answer (A) is incorrect because The cost of goods sold budget cannot be prepared until the purchases budget is complete.
Answer (B) is incorrect because The purchases budget cannot be prepared until the production budget is complete.
Answer (C) is incorrect because The administrative budget is the last of the four listed to be prepared.
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