A Divisional Manager Is Given an Operating Budget of $3

question 96

Multiple Choice

A divisional manager is given an operating budget of $3.7 million for the coming year and is evaluated on the basis of the amount of output the division can produce based on that budget.On the basis of which of the following budget approaches is the divisional manager being remunerated?

• A) Revenue budget approach
• B) Cash flow budget approach
• C) Expense budget approach
• D) Profit budget approach
• E) Capital budget approach

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Definitions:

Dummy Variables

Variables created to include categorical data in regression models by converting categories to a binary form (0 or 1), representing the presence or absence of some categorical effect.

Nominal Characteristic

A qualitative attribute of data that categorizes but does not imply any quantitative ordering or measure.

Nominal Variables

Factors that denote classifications without any inherent hierarchy or sequence.

Dummy Variables

Binary variables created to represent categorical data in order to use such variables in regression analysis.