A Principal Difference Between Operational Budgeting and Capital Budgeting Is

question 55

Multiple Choice

A principal difference between operational budgeting and capital budgeting is the time frame of the budget.Because of this difference, capital budgeting:

• A)is an activity that involves only the financial staff.
• B)is done on a rolling budget period basis.
• C)focuses on the present value of cash flows from investments.
• D)is concerned with a long-term net income forecast.

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Definitions:

Machine-Hours

The duration, typically measured in hours, that machinery is in operation for producing goods during a specific timeframe.

Departmental Predetermined Overhead Rates

Rates used to allocate indirect costs to products or services, computed in advance for each department within a company.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated in the manufacturing process.

Applied Manufacturing Overhead

Costs related to production that are not directly associated with the product but are allocated to it, such as utilities or maintenance expenses of the production facility.