Question
Based on level of activity or capacity utilization,
there is a type of budget which is prepared keeping in mind one level of output. It is a budget which is designed to remain unchanged irrespective of the level of activity attained. Identify it among the following: Refer to the following information to answer the next 4 questions (Q 23 to Q 26) A budget is a financial blueprint that plays a fundamental role in the strategic management of finances for individuals, businesses, and governments. It serves as a comprehensive plan, projecting anticipated income and allocating funds to various expenses over a specific period, typically a fiscal year. The primary objectives of a budget are multi-faceted. It serves as a planning tool, enabling the establishment of financial goals and the systematic allocation of resources to meet these objectives. Moreover, budgets provide a framework for financial control by allowing individuals and organizations to compare actual financial performance against the budgeted figures, facilitating adjustments and corrective measures as needed. Beyond control and planning, budgets foster financial accountability and transparency. They create a structured approach to financial decision-making, aligning expenditures with priorities and strategic objectives. A well-constructed budget encourages financial discipline by setting clear expectations and promoting responsible resource management. It also serves as a communication tool, ensuring that stakeholders within an organization are on the same page regarding financial expectations and constraints. Furthermore, budgets contribute to emergency preparedness by allocating funds for unforeseen circumstances, thereby enhancing financial resilience. They facilitate goal alignment, directing financial resources toward achieving specific targets, whether it be saving for a major purchase, reducing debt, or investing in growth opportunities. In addition, budgets support effective debt management by incorporating debt repayment into the financial plan. They also play a crucial role in performance evaluation, allowing for regular assessments of financial results and the adjustment of strategies and goals accordingly.Solution
Based on level of activity or capacity utilization, budgets are classified as follows: Fixed Budgets – is prepared keeping in mind one level of output. It is a budget which is designed to remain unchanged irrespective of the level of activity attained. If actual output differs from the budgeted level of output, variances arise. Flexible Budgets – It is designed to change in relation to the level of activity attained. Flexible budgets are prepared in those companies where it is extremely difficult to forecast output and sales with accuracy.
An article is marked 50% above its cost price and sold after offering a discount of Rs. 50 such that its selling price is Rs. 120 more compared to its s...
A shopkeeper marked an article P% above its cost price and sold it for Rs. 810 after giving a discount of 20%. If the shopkeeper had a loss of 7.4% on t...
A fruit vendor purchased oranges at Rs. 180 per dozen and sold them for Rs. 18 each. He managed to sell 10 dozen oranges. Calculate the total profit he ...
The ratio of the cost price and marked price of an article is 4:7, respectively. The article is sold after giving a discount of Rs. 800 such that there ...
Cost price of an article is Rs.100. Find the selling price of the article, if it is sold at two successive discounts of 20% and 30% and the ratio betwee...
On a certain item profit is 150%. If the cost price increases by 25% what will be the new profit margin (in %)?
The cost price of 16 mangoes is Rs.220. Because of bad quality of mangoes, the shopkeeper has to sell mangoes at a loss that is equal to selling price o...
A shopkeeper marked up his articles 50% above its cost price and sold it after two successive discounts of 15% and 30%, respectively. Find his profit pe...
The cost price of “cold drinks” is ₹460. Its marked price is ₹40 less than its cost price, and then a 10% discount is giv...
A product costs a company Rs 120 to manufacture and it sold the product to a dealer for Rs 140, who is turn sold it to a shopkeeper for Rs 170, who sold...
