The correct answer is: D. master plan models
A master budget is a comprehensive financial plan for a company. It is a formal statement of management’s plans for the future, and it is used to coordinate the activities of all departments within the company. The master budget is typically prepared for a one-year period, but it can also be prepared for shorter or longer periods of time.
The master budget is made up of a number of different components, including the sales budget, the production budget, the direct materials budget, the direct labor budget, the manufacturing overhead budget, the selling and administrative expense budget, the cash budget, and the pro forma income statement.
The sales budget is the starting point for the master budget. It is a forecast of sales for the coming year. The sales budget is used to determine the production budget, which is a forecast of the number of units that need to be produced in order to meet sales expectations. The production budget is then used to determine the direct materials budget, the direct labor budget, and the manufacturing overhead budget.
The selling and administrative expense budget is a forecast of the costs that will be incurred in order to sell and distribute the company’s products. The cash budget is a forecast of the company’s cash receipts and cash disbursements for the coming year. The pro forma income statement is a statement of the company’s projected income for the coming year.
The master budget is a valuable tool for planning and controlling a company’s operations. It helps to ensure that the company has the resources it needs to meet its sales goals, and it helps to identify potential problems before they occur.
The other options are incorrect because they do not accurately describe the mathematical relationships that exist between operating and financing activities that affect master budgets.
- Option A, “math plan model,” is not a commonly used term. It is not clear what this term would refer to.
- Option B, “financial planning models,” are models that are used to forecast a company’s financial performance. They do not typically include mathematical relationships between operating and financing activities.
- Option C, “operating plan models,” are models that are used to forecast a company’s operating performance. They do not typically include mathematical relationships between operating and financing activities.