When Creating a Budget, It Is Important to

question 48

Multiple Choice

When creating a budget, it is important to

• A) Save the amount you have left at the end of the month.
• B) Set aside savings after your variable expenses are paid.
• C) Save an amount no more than 3% of your annual income in an emergency fund.
• D) Spend the amount of money you have budgeted in each category.
• E) "Pay yourself first" by setting aside savings before other expenses are budgeted.

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Definitions:

Unit Contribution

The amount each unit sold contributes to covering fixed costs and generating profit, calculated as the unit selling price minus variable cost per unit.

Penetration Pricing

Strategy that sets a low price as a major marketing tactic.

Market Recognition

The degree to which a company or product is known and acknowledged by potential customers and the wider market.

Breakeven Point

The moment when total costs and total revenues are exactly equal, meaning that a business or project is neither making a profit nor experiencing a loss.