Which of the following are typically included in a manufacturer's operating budgets?

• A. Sales budget
• B. Direct materials budget
• C. Capital expenditures budget
• D. Cash receipts budget

Answer: (B)

Verified step by step guidance

1. Understand the concept of operating budgets: Operating budgets are financial plans that focus on the day-to-day operations of a business, typically including sales, production, and related expenses.
2. Identify the components of a manufacturer's operating budgets: These typically include the sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, and selling and administrative expenses budget.
3. Clarify the role of the sales budget: The sales budget is the starting point for the operating budget, as it forecasts the expected revenue based on projected sales volume and price.
4. Explain the direct materials budget: This budget estimates the cost and quantity of raw materials needed for production, based on the production budget and inventory requirements.
5. Differentiate between operating budgets and other budgets: Capital expenditures budget and cash receipts budget are not part of operating budgets. Capital expenditures budget focuses on long-term investments, while cash receipts budget deals with cash inflows, which are part of financial budgets.