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B Com Exam  >  B Com Test  >  Cost Management  >  Test: Functional Budgets - B Com MCQ

Functional Budgets - Free MCQ Practice Test with solutions, B Com Cost


MCQ Practice Test & Solutions: Test: Functional Budgets (10 Questions)

You can prepare effectively for B Com Cost Management with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Functional Budgets". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Functional Budgets - Question 1
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What is the primary purpose of a functional budget in a business?

Detailed Solution: Question 1

Functional budgets are primarily used to control spending and manage the growth of a business by focusing on short-term expenditures within a specific department or function. While they provide valuable financial information, their main goal is to ensure that spending within a particular area is managed effectively.

Test: Functional Budgets - Question 2
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Which department or function is typically responsible for preparing the sales budget?

Detailed Solution: Question 2

The sales department is typically responsible for preparing the sales budget. This budget forecasts the quantities and values of sales to be achieved in a budget period and serves as the starting point for other budgets in the organization.

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Test: Functional Budgets - Question 3
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What does the production budget include?

Detailed Solution: Question 3

The production budget includes the total output of the organization broken down into estimates of output for each type of product, along with a scheduling of operations to be performed. It also includes a forecast of the closing finished stock to be maintained.

Test: Functional Budgets - Question 4
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What is the purpose of the cost of production budget?

Detailed Solution: Question 4

The cost of production budget is prepared to estimate the total cost of production planned for a budget period. It includes not only raw materials and labor costs but also overhead expenses.

Test: Functional Budgets - Question 5
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Who is responsible for preparing the labor and personnel budget?

Detailed Solution: Question 5

The Works Manager is responsible for preparing the labor and personnel budget, which includes estimates of the direct labor required to meet production targets and other personnel-related details.

Test: Functional Budgets - Question 6
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What does the administration expenses budget cover?

Detailed Solution: Question 6

The administration expenses budget covers expenses incurred in framing policies, directing the organization, and controlling business operations. It includes expenses related to the central office and management salaries.

Test: Functional Budgets - Question 7
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What is the purpose of the capital expenditure budget?

Detailed Solution: Question 7

The capital expenditure budget is prepared to estimate the amount of capital needed for acquiring fixed assets required to fulfill production requirements. It focuses on the acquisition of assets like plant and equipment.

Test: Functional Budgets - Question 8
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How is the cash budget divided, and what does it estimate?

Detailed Solution: Question 8

The cash budget is divided into two parts: one estimating cash receipts (e.g., cash sales, credit collections) and the other estimating cash payments (e.g., purchases, wages, expenses). It also provides for a minimum cash balance to ensure liquidity.

Test: Functional Budgets - Question 9
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Why are research and development budgets typically established on a long-term basis?

Detailed Solution: Question 9

Research and development budgets are typically established on a long-term basis (e.g., 5 to 10 years) because research and development projects can span multiple years and require continuous investment. They focus on long-term innovation and development efforts.

Test: Functional Budgets - Question 10
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What is the main purpose of a functional budget in a business organization?

Detailed Solution: Question 10

The main purpose of a functional budget in a business organization is to control short-term expenditures within specific departments or functions. It helps ensure efficient management of resources and spending within those areas.

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About this B Com Practice Test

This test contains 10 MCQs on Functional Budgets with detailed solutions for each question. It is part of the Cost Management course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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If you found this Functional Budgets MCQ Test helpful, you can further enhance your B Com preparation with in-depth courses on EduRev, for all the subjects and topics available in Cost Management course. The course offers:
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