When Creating the Sales Budget, Management Simply Takes the Sales

question 52

True/False

When creating the sales budget, management simply takes the sales from the year before and divides that total by 12 months. Thus, each month will always predict the same amount of budgeted sales.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity of materials supposed to be used, multiplied by the standard cost per unit.

Standard Quantity

The predetermined amount of materials or inputs that should be used in the production of goods or services under normal operating conditions.

Standard Price

A predetermined cost assigned to goods and services, used for budgeting, cost control, and performance evaluation purposes.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.