Jan 04, 2017 · E. Sensitivity analysis. Difficulty: 1 Easy Learning Objective: 10-05 Deal with uncertainty in the budgeting process 102. The proper treatment of the cost of unused capacity, as identified through the use of an activity-based budgeting (ABB) system, is: A. To charge the amount to customers whose uneven orders caused the unused capacity.
Jan 06, 2014 · 101.Which one of the following is not a way to deal with uncertainty in the budget-preparation process? A. Linear programming. B. What-if analysis. C. Monte Carlo Simulation (MCS). D. Scenario analysis. E. Sensitivity analysis.
Jun 27, 2012 · They represent one way of handling risk and uncertainty in the ca pital budgeting process. A. Similar to financial options , real options are traded on an open exchange . Real option refers to the options whose underlying options are real assets. In the process of capital budgeting, they represent one way to handle uncertainty and risk.
Jun 11, 2013 · 37. Which one of the following statements concerning capital budgeting is not true? A. A basic objective underlying capital budgeting is to select assets that will earn a satisfactory return. B. Capital budgeting is the process of planning asset investments. C. Capital budgeting is based on precise estimates of future events. D.
A budget is a tool that managers use to plan and control the use of scarce resources. A budget is a plan showing the company’s objectives and how management intends to acquire and use resources to attain those objectives. If playback doesn't begin shortly, try restarting your device.
The budgeting process involves planning for future profitability because earning a reasonable return on resources used is a primary company objective. A company must devise some method to deal with the uncertainty of the future.
Planning alone, however, is insufficient. Control is also necessary to ensure that plans actually are carried out. A budget is a tool that managers use to plan ...
The period covered by a budget varies according to the nature of the specific activity involved. Cash budgets may cover a week or a month; sales and production budgets may cover a month, a quarter, or a year; and the general operating budget may cover a quarter or a year.
Top management support All management levels must be aware of the budget’s importance to the company and must know that the budget has top management’s support. Top management, then, must clearly state long-range goals and broad objectives. These goals and objectives must be communicated throughout the organization.