Answer (D) 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 The production budget normally cannot be prepared until the expected sales are known.
Answer (B) is incorrect because The operating budget is another term for the budget used on a day-to-day basis for managing operations. It cannot be prepared until after the sales budget is prepared.
Answer (C) is incorrect because Preparation of the sales budget is the first step in the overall budgeting process.
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