The Following Budgets Are Developed in Which Order (From First

question 193

Multiple Choice

The following budgets are developed in which order (from first to last) ?
A = Production budget
B = Direct materials costs budget
C = Budgeted income statement
D = Revenues budget

• A)DABC
• B)ABDC
• C)DCAB
• D)CABD

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.

Variable Expense Ratio

The proportion of variable expenses to total sales, illustrating how variable costs change with sales levels.

Break-even Point

The level of production or sales at which total revenues equal total costs, resulting in zero profit or loss.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, reflecting the ratio of fixed costs to variable costs.