Which of the following statements is correct regarding the components of the master budget?

(A) The cost of goods sold budget is used to create the selling and administrative expense budget.

(B) The manufacturing overhead budget is used to create the production budget.

(C) Operating budgets are used to create cash budgets.

(D) The cash budget is used to create the capital budget.

Question

Business

Lina Park

10 November, 10:31

Which of the following statements is correct regarding the components of the master budget?

(A) The cost of goods sold budget is used to create the selling and administrative expense budget.

(B) The manufacturing overhead budget is used to create the production budget.

(C) Operating budgets are used to create cash budgets.

(D) The cash budget is used to create the capital budget.

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Answers (1)

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Keyla · Answer 1

(C) Operating budgets are used to create cash budgets.

Explanation:

The operating budget fprecast the various budget costs estimates for various expenses as direct materials, direct labor and other manufacturing overhead expenses and these expenses are feed in to the cash budget as the cash disbursements required in the future.

Therefore, The operating budgets are used in creating cash budgets.