Which of the Following Statements About Budgeting Is NOT True

question 106

Multiple Choice

Which of the following statements about budgeting is NOT true?

• A)The operating budget should be prepared by top management,rather than mid-management personnel,because they have the overall objectives of the company in mind.
• B)Budgeting is an aid to planning and control.
• C)Budgets help to coordinate the activities of the entire organization.
• D)Budgets promote communication and coordination between departments.

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Definitions:

Common Fixed Expense

Costs that do not vary with production volume, and are shared among different products or business segments.

Contribution Margin Ratio

The portion of sales revenue left over after variable expenses have been deducted, expressed as a percentage of sales revenue.

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume, such as raw materials and direct labor.

Sales

Sales refer to the revenue generated from the exchange of goods or services for money or other assets between a seller and a buyer.