The fiNancial Planning Method in Which Accounts Are Varied Depending

question 93

Multiple Choice

The financial planning method in which accounts are varied depending on a firm's predicted sales level is called the:

• A) Percentage of sales approach.
• B) Sales dilution approach.
• C) Sales reconciliation approach.
• D) Common-size approach.
• E) Time-trend approach.

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Definitions:

Variable Costs

These are costs that vary directly with the level of production or sales volume.

Budgeted Net Income

The estimated amount of money expected to be earned over a specific period after all expenses are subtracted.

Variable Costs

Costs that change in proportion to the level of production or business activity.

Fixed Costs

Expenses that do not vary with the volume of output, including costs like rent, salaries, and insurance premiums.