When a Manager Is Evaluated on the Difference Between Sales

question 98

Multiple Choice

When a manager is evaluated on the difference between sales revenue and the budgeted cost of making those goods and services,this is an example of a(n) _____________ budget approach.

• A) revenue
• B) cash flow
• C) expense
• D) profit
• E) capital

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Definitions:

Miller-Orr Model

A financial model that helps in managing cash flows and cash reserves of firms, focusing on maintaining an optimal balance level.

Interest Rate

The percentage charged on a loan or paid on deposits over a specific period, reflecting the cost of borrowing or the gain on savings.

Target Cash Balance

The ideal amount of cash that a company aims to hold to meet operational and transaction needs while minimizing holding costs.

Miller-Orr Model

A model used in financial management to determine the optimal level for cash balances under uncertainty.