Which of the Following Describes the Operating Expenses Budget

question 9

Multiple Choice

Which of the following describes the operating expenses budget?

• A)It aids in planning to ensure the company has adequate inventory on hand.
• B)It depicts the breakdown of sales based on terms of collection.
• C)It helps in planning to ensure the business has adequate cash.
• D)It captures the variable and fixed expenses of the business.

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Definitions:

Contribution Format

A type of income statement where costs are separated into variable and fixed categories, highlighting the contribution margin.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the proportion of fixed costs in a company's cost structure.

Sales Increase

The rise in the volume or amount of sales over a specific period, reflecting business growth.

Net Operating Income

The profit generated from a company's core business operations after deducting all operating expenses except for interest and taxes.