Question

Which of the following is true of the master budget? a.Monthly budgets are derived by dividing...

Which of the following is true of the master budget?

a.Monthly budgets are derived by dividing the master budget by 12.

b.The master budget can reflect seasonal variations.

c.Variable costs cannot change from one month to another.

d.Fixed costs cannot change from one month to another.

e.None of these choices are correct.

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Answer #1

solution:

b. The master budget can reflect seasonal variations

Explanation:

  • In master budgt monthly budgets ared added from one to another month it is an continuous budget of one year
  • Master budget is an integrated budget. This is reflected int he application of depreciation and stock this smooths out of the peaks ad caused by seasonal varations.
  • Variable cost can change from one month to another
  • Fixed cost may change from one month to another if the customer or equipment cannot handle the volume
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