A. The production budget is a part of the operating budget. The operating budget is part of the master budget. The master budget is a comprehensive expression of management's operating and financial plans for a future time period (usually a year) that is summarized in a set of budgeted financial statements. It embraces the impact of both operating and financing decisions.

B. The master budget is an annual budget. The quantitative effect of strategic plans, which are long-term plans for periods of more than five years, must be integrated into the annual budgeting process, as well as into the capital budgeting process. As such, strategic planning precedes the development of the annual budget.

C. The capital investment budget is a long-term budget that is outside of the normal, annual budgeting process. The effect of budgeted current period expenditures for capital assets will need to be taken into account in the development of the master budget, since they will affect the balance sheet, income statement, and cash flows. However, the capital investment budget is not the final budget prepared in preparation of the comprehensive master budget.

D. The cash management and working capital budgets are the last budgets prepared. This is because they are dependent upon all of the other budgets since the production budget, advertising budget, overhead budget, and so on all have a cash component that is reflected in the cash budget and the working capital budget. The cash budget and working capital budgets are therefore prepared last, because all of the other budgets contribute to them.