The production manager at ABC Inc. is responsible for formulating the budget for his department. He will be evaluated on his ability to control costs. After considerable thought, he arrives at his best estimate of costs, and then adds a further 10% to the projections. Chances are he has inflated the cost projections because Othat is the way it has always been done. O conservative accounting practise requires that he not under report expenses. O by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation. Onone of the above.

The production manager at ABC Inc. is responsible for formulating the budget for his department. He will be evaluated on his ability to control costs. After considerable thought, he arrives at his best estimate of costs, and then adds a further 10% to the projections. Chances are he has inflated the cost projections because Othat is the way it has always been done. O conservative accounting practise requires that he not under report expenses. O by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation. Onone of the above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

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The production manager at ABC Inc. is responsible for formulating the budget for his department. He will be evaluated on his ability to
control costs. After considerable thought, he arrives at his best estimate of costs, and then adds a further 10% to the projections.
Chances are he has Inflated the cost projections because
that is the way it has always been done.
O conservative accounting practise requires that he not under report expenses.
O by overestimating expenses, it will make it easier for him to come in under budget and receive a favourable evaluation.
Onone of the above.

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