Which of the Following Represents the Correct Order in Which

question 124

Multiple Choice

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

• A) Sales budget, cash budget, direct materials budget, direct labor budget.
• B) Production budget, sales budget, direct materials budget, direct labor budget.
• C) Sales budget, cash budget, production budget, direct materials budget.
• D) Marketing and administrative expense budget, budgeted income statement, cash budget, budgeted balance sheet.

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the most recently produced or acquired items are the first to be expensed.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a product.

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a product.

Net Operating Income

This is the total profit of a business after operating expenses are subtracted from gross revenue but before taxes and interest expenses are deducted.