Which of the following is not a possible purpose of an operating budget within a

Question

Which of the following is not a possible purpose of an operating budget within an organization? a. Assist in planning and setting objectives b. Create better communication in the organization c. Motivate employees d. Provide a vehicle for performance measurement e. All of the above are purposes In creating a master operating budget, which budget must be prepared prior to preparing the direct materials purchase budget? a. Production budget b. Manufacturing overhead budget c. Cash budget d. Both a & b e. All of the above Doll sells the product at $20 apiece. 10% of those sales are cash. The remaining credit sales are collected at 40% in the month of sale, 55% in the month following, and the last 5% of credit sales are uncollectible. What is the budgeted total cash collections for April? a. $119,700 b. $66,240 c. $131,400 d. $117,000 e. $72,000 February 6800 units March 5400 units 7200 units 4600 units April May

Explanation / Answer

1)

The main purpose of operating budget is tracking the expenses and income relating to operations of the firm like salaries, overheads costs, fixed operating expenses, marketing expenses etc. using these budgets managers can easily evaluate the performance and motivate the employees. It cannot be used for communication amongst various level of employees in the organization.

Hence, correct option is “b. Create better communication in the organization”

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