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Multiple Choice

Which of the following represents the normal sequence in which the indicated budgets are prepared?

A. Direct Materials, Cash Sales
B. Production, Cash, Income Statement
C. Sales, Balance Sheet, Direct Labor
D. Production, Manufacturing Overhead, Sales

Over an extended period of time in which the final ending inventories are zero, the accumulated net operating income figures reported under absorption costing will be:
A. greater than those reported under variable costing
B. less than those reported under variable costing
C. the same as those reported under variable costing
D. higher or lower since no generalization can be made

Solution Preview

1. The correct answer is B.
The sales budget is prepared first always so A and D are incorrect. From the sales budget, the production budget is prepared and ...

Solution Summary

The solution has two multiple choice questions relating to budget preparation and absorption costing