Choice "B" is correct. The order of budget preparation begins with the sales budget which logically drives the production budget (to support sales), which, in turn, drives the direct materials purchases (to support production) from which the cash disbursements budget is derived.
Choice "d" is incorrect. Budgets are driven by sales forecasts. To begin with the production budget is illogical and presumes that the budget preparer can mandate sales levels based on production or is not constrained by inventory levels.
Choice "c" is incorrect. Budgets are driven by sales forecasts that ultimately determine cash flows. Beginning with cash disbursements is incorrect.
Choice "a" is incorrect. Although the order presented in this selection properly begins with sales, it does not logically support anticipated sales with production. The placement of direct materials before production appears to indicate that direct material purchases are determined independently of production as determined by sales. That relationship is generally not logical.