Given the Following Budgets, Which Would Be Prepared First When

question 37

Multiple Choice

Given the following budgets, which would be prepared first when completing the master budget?

• A) The direct materials budget
• B) The manufacturing overhead budget
• C) The pro-forma income statement
• D) The cash budget

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the business.

Static Budget

A financial plan that does not change over the period for which it is set, regardless of any changes in activity levels.

Standard Cost

A predetermined cost of manufacturing a product or performing a service under normal conditions, used for budgeting and performance evaluation.

Direct Labour

The wages paid to workers who are directly involved in the manufacturing of products or providing services.