The management of an electronics company created the annual budget on a single assumed level of sales. This level of sales is to remain constant for the whole year. Later, the management finds it difficult to accurately measure the financial progress of the firm as the values in the estimated budget vary significantly from the actual sales. In the given scenario, the management most likely created a _____.
A) perpetual budget
B) zero deficit budget
C) black budget
D) static budget

Question

Quizplus · Accepted Answer

A static budget is based on a fixed level of sales or production and does not change with actual sales levels, leading to discrepancies when actual sales differ from the assumed level.

The Management of an Electronics Company Created the Annual Budget