Which One of the Following Statements Regarding Financial Planning Models

question 82

Multiple Choice

Which one of the following statements regarding financial planning models is false?

• A) The models should include as much detail as possible.
• B) The results of a model are pro forma financial statements.
• C) The plug variable maintains consistency.
• D) Financial analysis is not used in financial planning.

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Definitions:

Activity Cost Pools

Groups of individual costs driven by the same cost drivers, used in activity-based costing to allocate costs more accurately.

Customer Margin

The profit margin that a company earns from a particular customer, taking into account all revenues and costs associated with that customer.

Idle Capacity

The condition when resources, typically manufacturing or production facilities, are available but not in use.

Activity Rates

The costs assigned to specific activities, used in activity-based costing to allocate overhead costs more accurately.