Answer (B) is correct . The starting point for the annual budget is the sales forecast. All other aspects of the budget, including production, costs, and inventory levels, rely on projected sales figures.
Answer (A) is incorrect because A capital budget is only concerned with capital expenditures and cannot be prepared until it is known whether new equipment or facilities will be needed to service the expected sales for the upcoming period.
Answer (C) is incorrect because This aspect of the budget cannot be prepared until sales have been estimated.
Answer (D) is incorrect because Sales must be estimated before a production plan can be prepared.
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