Question

For each item used in the firm’s production budget and direct-labor budget, select the other components of the master budget (except for financial statement budgets) that also, directly, or indirectly, would use these data. Can you assist explaining which are correct for each and why/how they directly and indirectly use these data?
Sales data: Selling and administrative expense budget
Production-overhead budget
Direct-material budget
Cash budget
Cost-of-goods-sold budget
Sales budget
Cash disbursements budget
Production data: Selling and administrative expense budget
Direct-material budget
Cost-of-goods-sold budget
Production-overhead budget
Cash budget
Cash disbursements budget
Sales budget
Direct-labor-hour data: Selling and administrative expense budget
Production-overhead budget
Direct-material budget
Cash budget
Cost-of-goods-sold budget
Sales budget
Cash disbursements budget
d. Direct-labor cost data: Selling and administrative expense budget
Production-overhead budget
Direct-material budget
Cash budget
Sales budget
Cost-of-goods-sold budget
Cash disbursements budget

Answer 1

a)Components of the master budget, other than the production budget and the direct-labor budget, that would also directly or indirectly use the sales data include the following:
·Sales budget
·Cost-of-goods-sold budget
·Selling and administrative expense budget

b)Components of the master budget, other than the production budget and the direct-labor budget, that would also directly or indirectly use the production data include the following:
·Direct-material budget
·Production-overhead budget
·Cost-of-goods-sold budget

c)Components of the master budget, other than the production budget and the direct-labor budget, that would also directly or indirectly use the direct-labor-hour data include the following:
·Production-overhead budget (for determining the overhead application rate)
·Cash disbursements budget
·Cash budget

d)Components of the master budget, other than the production budget and the direct-labor budget, that would also directly or indirectly use the direct-labor cost data include the following:
·Production-overhead budget (for determining the overhead application rate)
·Cost-of-goods-sold budget
·Cash disbursements budget
·Cash budget