Lesson eLearning

Which control technique is most appropriate for ensuring that a retail store does not exceed its inventory holding cost budget?

medium MCQ 1 mark Class 12 · Business Studies · Controlling
  1. A. Break‑even analysis
  2. B. Budgetary control
  3. C. Financial ratio analysis
  4. D. Management by objectives
Answer
B. Budgetary control

The correct answer is B. Budgetary control — Select option B as the correct technique.

Step-by-step solution

  1. Identify the purpose: limiting inventory holding costs within a budget.
  2. Recall that budgetary control involves setting a budget and monitoring actual expenses against it.
  3. Check each option: break‑even analysis is for profit‑volume decisions, financial ratios assess performance ratios, MBO sets objectives, but only budgetary control directly limits costs.
  4. Select option B as the correct technique.
Common mistake: Choosing break‑even analysis instead of budgetary control for cost limitation

Concept tested: Control techniques – budgetary control

Published · How this solution was prepared and checked

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