A Common Starting Point in the Budgeting Process Is

question 28

Multiple Choice

A common starting point in the budgeting process is

• A) expected future net income.
• B) past performance.
• C) to motivate the sales force.
• D) a clean slate with no expectations.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, resulting in a decreased cost per unit.

Long-run Average Total Cost

The long-run average total cost is the per-unit cost of production when all inputs can be adjusted, reflecting the most cost-efficient scale of operation.

Long-run Total Costs

The total costs incurred by a firm when all inputs are variable and can be adjusted.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.