Which of the Following Statements About Budgeting Is Not True

question 85

Multiple Choice

Which of the following statements about budgeting is not true?

• A) Budgeting is designed to be an aid to planning and control.
• B) Budgets create standards for performance evaluation.
• C) Budgets help coordinate the activities of the entire organization.
• D) Budgeting forces managers to think ahead and to formalize long-range objectives.
• E) Budgeting eliminates the need for day-to-day monitoring of operations.

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Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Total Output

Total output is the complete quantity of goods or services produced by an economy, firm, or production process within a specific period.

Marginal Cost

The additional cost incurred by producing one more unit of a product.

Average Variable Cost

The per unit cost of production excluding fixed costs, calculated by dividing the total variable costs by the quantity of output produced.