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What is an operating budget What are the benefits of an operating b

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What is an operating budget? What are the benefits of an
operating budgeting?
Which budget sets the overall level of activity?
When is it prepared? Why?
Why is it important to manage the level of inventory?
What are the consequences of an inventory shortage?
Excess inventory?
Solution
Answer:
Operating budget:Operating budgeting is projection of
income and expenses for the upcoming period (usually one
year).
Benefits of an operating budgeting:
Sales budget sets the overall level of activity.
It is prepared in the very first step of budgeting.
Level of inventory is necessary to maintain to avoid
inventory shortage cost.
Inventory shortage may result in incurring Shortage costs
like customer loss, lower revenue etc.
Cash Budget is prepare to allocate the cash receipted
toward disbursement.

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What is an operating budget? What are the benefits of an operating budgeting? Which budget sets the overall level of activity? When is it prepared? Why? Why is it important to manage the level of inventory? What are the consequences of an inventory shortage? Excess inventory? Solution Answer: Operating budget:Operating budgeting is projection of income and expenses for the upcoming period (usually one year). Benefits of an operating budgeting: Sales budget sets the overall level of activity. It is prepared in the very first step of budgeting. Level of inventory is necessary to maintain to av ...
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