To Reduce Subjectivity in the Budgeting Process and Gather as Much

question 110

Multiple Choice

To reduce subjectivity in the budgeting process and gather as much information as possible,management often uses which of the following method(s) ?

• A)asking sales staff and/or market researchers for an estimate of the future period's sales.
• B)using the Delphi technique and trend analysis.
• C)entering past sales data into a regression model to obtain a statistical estimate of factors affecting sales (econometric model).
• D)all of the above.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

After-tax Profit

The net income of a company after all taxes have been deducted from revenues.

Industry Life Cycle

A concept describing the stages of growth and development that a sector or industry goes through, from emergence to decline.

Stalwarts

Well-established companies known for their durability, stable earnings, and regular dividend payments.