Some Companies Refer to Budgeting as Targeting and Other Companies

question 46

True/False

Some companies refer to budgeting as targeting and other companies refer to budgets as profit plans.

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Definitions:

Fixed Costs

Regular costs that do not vary with the scale of production or sales activities, encompassing rent, salary disbursements, and insurance contributions.

Target Net Income

The desired profit that a company aims to achieve within a specific period, often used in budgeting and planning.

Required Sales

Required sales represent the amount of sales needed to achieve a particular financial target, such as breaking even or reaching a desired profit level.

Variable Costs

Costs that change in proportion to the level of activity or production volume, such as raw materials and direct labor costs.