Which of the Following Is Not an Example of Conflicts

question 46

Multiple Choice

Which of the following is not an example of conflicts created in the budgeting process?

• A)Because firms want to use the most up-to-date information about local operating conditions, they ask lower-level employees for this information, but these employees may not be forthright in sharing their information.
• B)Because a production manager may be overly pessimistic about expected costs, the quality of information used to plan costs may be reduced.
• C)Downplaying expected sales may lead to more achievable targets for the managers, but reduce the quality of information used to plan sales.
• D)The planned targets in budgets become the benchmark for actual results, thereby facilitating control.
• E)All of the above are examples of conflicts in the budgeting process.

---

Definitions:

Estimated Cost

An approximation of the cost or expenditure associated with an activity, project, product, or service, made in the absence of precise information.

Gross Profit Ratio

A financial metric expressing the gross profit as a percentage of net sales, indicating the efficiency of production or service delivery.

Inventory Destroyed

Refers to stock items that have been damaged, expired, or cannot be sold, leading to a loss for the business.

Typical Gross Profit

The average gross profit a company makes after subtracting the cost of goods sold from its net sales.