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Asked Dec 21, 2019
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Operating and financial budgets. Which of the following statements is correct regarding the drivers of operating and financial budgets?

  1. The sales budget will drive the cost of goods sold budget.
  2. The cost of goods sold budget will drive the units of production budget.
  3. The production budget will drive the selling and administrative expense budget.
  4. The cash budget will drive the production and selling and administrative expense budgets.
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Operating Budget: The operating budget is that budget which is prepared to plan all the operating activities of an organization for a particular period. This budget combines all the sales, production, raw materials, direct labor, manufacturing overhead and selling and administrative expenses budget.

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