Regarding the budgeting process for the entire firm:
A)Using a short-term (3 month)budget destroys the value of a budget as a tool for managerial control.
B)The process starts with the preparation of a financial department budget,because that is where the money comes from.
C)The sales budget depends upon the production department budget.
D)Small firms really do not need budgets.
E)None of these is correct.

Question

Quizplus · Accepted Answer

None of the given options is correct. The budgeting process for the entire firm is a complex task involving various departments and functions. The process usually starts with the preparation of a sales budget that informs the production department about the expected demand for products or services. Based on that, the production department prepares a production budget, which involves determining the number of units to be produced, production costs, and other related aspects. The financial department then creates a budget that outlines the financial resources needed to achieve the production targets. Therefore, all the departments of the firm must be involved in the budgeting process to develop an effective and comprehensive budget. Furthermore, a budget should cover a more extended period, such as a year, to enable firms to have a long-term perspective and make informed decisions.

Regarding the Budgeting Process for the Entire Firm