In Preparing the Operating Budget, the First Step Is Preparing

question 62

Multiple Choice

In preparing the operating budget, the first step is preparing the

• A)cash budget.
• B)sales budget.
• C)budgeted income statement.
• D)purchases budget.

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Definitions:

Overhead Cost Pool

A collection of indirect costs that are grouped together to aid in their allocation to cost objects.

Activity Measure

A metric used to quantify the level of activity, work, or output in a business process or operation.

Overhead Rate

A financial ratio that allocates overhead costs to products or services based on a predetermined measure, often used to calculate total production costs.

Cost Hierarchy

A system that categorizes costs based on their direct traceability to production activities, often utilized in activity-based costing.