ACCA MA · Chapter 10 · Question 1 of 11
What is the principal budget factor?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The factor that limits the activities of the organisation, so that it has to be budgeted for first
Explanation
The principal (key or limiting) budget factor restricts the organisation's activity. It is often sales demand, but could be machine capacity or a scarce material. Its budget is prepared first because all other budgets depend on it.
More Budgeting MCQs
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- Q5Sales are made on credit and cash is received as follows: 20% in the month of sale (customers take a 2% discount), 50% in the following…
- Q6A budget for 10,000 units includes direct materials $50,000, direct labour $40,000 and production overheads $30,000. Materials and labour…
- Q7What is a flexible budget?