Jeff Willis Has a Budget That He Follows Each Month

question 64

Multiple Choice

Jeff Willis has a budget that he follows each month. He has used Microsoft's Money to help him determine what he wants to spend each month. At the end of the month, Money automatically compares what he budgeted with what he spent. Jeff can also graph these results if he wants to. What type of budget has Jeff created?

• A) Mental budget
• B) Physical budget
• C) Written budget
• D) Computerized budget
• E) None of these

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Definitions:

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the cushion a business has before it incurs a loss.

Operating Leverage

A measure of how sensitive net operating income is to a given percentage change in dollar sales.

Net Operating Income

The income derived from a firm's core business operations, not including taxes and interest expenses.