#1
What is a budget?
A detailed plan for future income and expenses
ExplanationPlan for future income and expenses.
#2
Which of the following is a primary step in the budgeting process?
Setting financial goals
ExplanationInitiating financial goals.
#3
What is the purpose of cost analysis?
To identify areas where costs can be reduced or controlled
ExplanationIdentifying cost reduction areas.
#4
What does ROI stand for in the context of cost analysis?
Return on Investment
ExplanationReturn on investment.
#5
What is a variable cost?
A cost that varies with changes in production or sales volume
ExplanationCost varying with production or sales.
#6
Which budgeting method involves adjusting future budgets based on past performance?
Flexible budgeting
ExplanationAdjusting budgets based on past performance.
#7
What is the break-even point?
The point at which total revenue equals total costs
ExplanationRevenue equals total costs.
#8
Which of the following is a characteristic of a static budget?
It remains unchanged regardless of actual performance
ExplanationUnchanged regardless of performance.
#9
What is the difference between fixed costs and variable costs?
Fixed costs remain constant regardless of production levels, while variable costs vary with changes in production or sales volume.
ExplanationFixed vs. variable costs.
#10
What is the formula to calculate the contribution margin ratio?
(Sales - Variable Costs) / Sales
ExplanationContribution margin ratio formula.
#11
What is the formula to calculate the payback period?
Initial Investment / Cash Inflows
ExplanationPayback period formula.
#12
Which cost estimation method uses historical data to predict future costs?
Regression analysis
ExplanationPredicting future costs using historical data.
#13
Which budgeting approach requires justifying all expenses from scratch each budget cycle?
Zero-based budgeting
ExplanationJustifying expenses each cycle.
#14
What is the formula for calculating the net present value (NPV) of an investment?
Total Cash Inflows / (1 + Discount Rate)^Number of Periods - Initial Investment
ExplanationNet present value formula.