The Most Important Part of Budgeting Is

question 24

Multiple Choice

The most important part of budgeting is:

• A) The budget itself
• B) Review of actual results against the budget
• C) Knowing how much each manager has available to spend in their department
• D) Communication between managers and finance in setting the budget

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Definitions:

Break-even Sales

Break-even sales refer to the amount of revenue required to cover all fixed and variable costs, resulting in zero profit or loss.

Selling Price

The amount of money a buyer pays to acquire a product or service.

Fixed Costs

Expenses that do not change in total regardless of changes in the level of production or sales activities within a certain range.

Margin of Safety

The difference between actual sales and the break-even point, indicating the level of risk in not covering fixed costs.