The following is true of the operational budget, except for: a. It has a short-t
ID: 2547521 • Letter: T
Question
The following is true of the operational budget, except for: a. It has a short-term focus, usually one year b. It sets a plan for the purchase of assets c. It is concerned with the cash effect of sales and expenses d. It contains a production budget The following is true of the operational budget, except for: a. It has a short-term focus, usually one year b. It sets a plan for the purchase of assets c. It is concerned with the cash effect of sales and expenses d. It contains a production budget a. It has a short-term focus, usually one year b. It sets a plan for the purchase of assets c. It is concerned with the cash effect of sales and expenses d. It contains a production budgetExplanation / Answer
The answer is option “b” – it sets a plan for the purchase of assets.
An operational budget includes revenue and expense targets, usually for a period of one year.
An operational budget starts with the budgeted production volume, price at which units will be sold. From these data points revenue is estimated. Variable costs and fixed costs are then reduced to determine budgeted profits.
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