A Budget Can Help in Decision-Making By

question 35

Multiple Choice

A budget can help in decision-making by:

• A) identifying excesses or shortages of cash.
• B) predicting purchase requirements for raw materials.
• C) identifying future resource constraints.
• D) all of the above.

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Definitions:

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced by a business.

Sales Decrease

A drop in the volume or amount of products or services sold by a company within a specific period.

Variable Costing

A costing method that includes only variable production costs (materials, labor, and overhead) in the cost of goods sold and treats fixed overhead costs as period expenses.