Financial Planning

question 28

Multiple Choice

Financial planning:

• A)focuses solely on the short-term outlook for a firm.
• B)is a process that firms employ only when major changes to a firm's operations are anticipated.
• C)is a process that firms undergo once every five years.
• D)considers multiple options and scenarios for the next two to five years.
• E)provides minimal benefits for firms that are highly responsive to economic changes.

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Definitions:

Fixed Factory Overhead

Comprises all the indirect costs associated with operating a factory that do not vary with production levels, such as rent, depreciation, and utilities.

Static Budget

A fixed budget established at the beginning of a period, not adjusted for changes in activity or actual performance levels.

Continuous Budget

A rolling financial plan that continuously updates by adding a new period as the current period is completed.

Zero-Based Budget

A budgeting method where all expenses must be justified for each new period, starting from a "zero base," with no reference to previous budgets.