The Practice of Maintaining Budgets for the Same Number of Future

question 3

Multiple Choice

The practice of maintaining budgets for the same number of future periods, revising those budgets as each period is completed and adding a new budget each period, is called:

• A) Master budgeting.
• B) Cyclical budgeting.
• C) Zero-based budgeting (ZBB).
• D) Rolling budgets (or, rolling financial forecasts).
• E) Kaizen (or continuous-improvement) budgeting.

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Definitions:

Marginal Cost

captures the cost added by producing one extra item of a product, emphasizing the concept of economies of scale and efficiency in production.

Marginal Product

An increase in output resulting from the use of one more unit of a particular input, holding all other inputs constant.

Opportunity Costs

The price paid when one skips the second-best option available in making a choice.

Economic Costs

The total costs of undertaking an economic activity, including both explicit costs and opportunity costs.