Question

The first step in creating the master budget is the creation of the

a. production budget.
b. direct labor budget.
c. cash budget.
d. sales budget.
e. budgeted income statement.

Answer 1

The first step in creating the master budget is the creation of the sales budget. A sales budget is a projection of the company's expected sales revenue for a specific period and serves as the foundation for the rest of the budgeting process.

Step-by-step explanation:

The first step in creating the master budget is the creation of the sales budget.

A sales budget is a projection of the company's expected sales revenue for a specific period. It serves as the foundation for the rest of the budgeting process as it provides information on the expected sales volume and unit price.

By estimating the sales revenue, the company can determine the resources needed, such as production capacity, labor, and materials, to meet the projected sales demand.