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2. The sales budget is the first budget prepared and each of the other budgets depends on it. True False 3. The quantities of direct materials in the direct materials budget can be derived from the formula: Desired Ending Direct Materials Units + Direct Materials Units Required for Production - Beginning Direct Materials Units = Required Direct Materials Units to be Purchased. True False 4. Which of the following is not a benefit of budgeting? a. It reveals the prevailing business conditions. b. It results in greater management awareness of the entity's overall operations. c. It creates an early warning system of potential problems. d. It provides definite objectives for evaluating performance at each level of responsibility. 5. If required production units are 75,000 , budgeted sales units are 65,000, and beginning finished goods units are 5,000 , then desired ending finished goods units would be. a. 2,000. b. 5,000 . c. 12,000 . d. 15,000