LU10 + LU11 - LU11: Operational Budgeting & Revenue Variance Analysis
3 important questions on LU10 + LU11 - LU11: Operational Budgeting & Revenue Variance Analysis
Reasons for budgeting planning?
- Forces managers to look forward and anticipate the future
- Examining, comparing, and selecting alternative courses of action
- Enables the setting of prices that deliver required income levels
- Enables control
- Motivation
- Communication
What are the steps in the process of budgeting?
- Financial objectives (maximizing long term profits)
- Revenue forecasts
- Expenses forecasts
- Net Income forecast
Companies with a low operating leverage
- Lower Risk
- Low CMR
- Have a low level of fixed cost relative to the variable costs
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