Operating budget sequence

The operating budget sequence is that portion of the budgeting process that uses the sales forecast to create a cascading series of departmental budgets that culminate in the budgeted income statement. For example, the sales volume information in the sales forecast is used to derive a cost of goods sold budget, as well as operating budgets for the sales, production, and administration departments. The results of these subsidiary-level budgets are then aggregated into the budgeted income statement.