For Budgets to Be Effective

question 16

Multiple Choice

For budgets to be effective:

• A) Goals should be attainable.
• B) Employees affected by a budget should be consulted when it is prepared.
• C) Evaluations should be made carefully with opportunities to explain any failures.
• D) They should be properly applied to avoid negative effects.
• E) All of these.

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Definitions:

Plant Size

The capacity or physical extent of a manufacturing facility, which influences its production capabilities, economies of scale, and operational efficiency.

ATC

ATC, or Average Total Cost, is the per-unit cost of production, calculated by dividing the total cost by the quantity of output produced, comprising both fixed and variable costs.

Marginal Cost

The cost of producing one additional unit of a good or service, considered crucial in determining production levels and pricing decisions.

Average Variable Cost (AVC)

The variable cost of production divided by the number of units produced, reflecting the cost per unit excluding fixed costs.