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sir the following is an mcq question:
Which of the following statements are true?
a Incremental budgets could be appropriate when:
b The business is growing rapidly
c Applied to total sales in an international seasonal business
d Applied to stationary costs
e Applied to production costs
f The business is stable
g For administration costs when the experience of the managers is limitedanswer: dfg
i want to know why the answer is not ‘e’ ? and also why is ‘d’ included?
thank you!
i mean increments in production costs, sales targets and inflation is what incremental budget does look into so why is ‘e’ left out sir?
Incremental budgeting is taking last years figure and adjusting it for changes in volume and for inflation.
Stationary is referring to things like paper and files and it appropriate for that.
As far as production costs are concerned, there are many costs of production (materials, labour etc.) and so it would be applied to each individual cost, not just to the total cost of production.
(This is not a very good question!)
Sir no offence, but i think you were led astray because of the similarity in spelling of 2 words “stationary” vs. “stationery”. Stationary would mean “stable” costs(in this context) and “stationery” would refer to paper/pen etc.
But overall i understood your point.
Thanks as always for being so helpful!
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