ECONOMICS

Detailed explanation-1: -Before preparing the direct materials, direct labor, and manufacturing overhead budgets, the production budget must be completed. Production budget. The production budget shows the number of units that must be produced.

Detailed explanation-2: -The sales budget must be prepared before the production budget because a company bases its production on the sales units, and then adjust this for the desired inventory holding.

Detailed explanation-3: -Production Budget Determines the number of units of finished goods that must be produced each budget period to satisfy expected sales needs (from the sales budget) and to provide for the desired finished ending inventory. o Budgeted cost of goods manufactured by multiplying units produced by the cost per unit.

Detailed explanation-4: -The sales budget is typically the first budget prepared.