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CIPS L4M2 Exam - Topic 10 Question 24 Discussion

A consulting firm in London had previously had static budgets. They were set once and locked in for the year. This resulted in departments meeting their budgets early and doing virtually nothing the rest of the accounting period. To address this imbalance, the company tossed out the static budget and developed a new one for each department of the next 18 months. And each month, real sales figures are analyzed against the plan and the budget is adjusted accordingly. Then the company adds another month into the budgeting plan. What type of budget this company is using?
B) Rolling budget
A) Activity-based budget
C) Incremental budget
D) Zero-based budget

CIPS L4M2 Exam - Topic 10 Question 24 Discussion

Actual exam question for CIPS's L4M2 exam
Question #: 24
Topic #: 10
[All L4M2 Questions]

A consulting firm in London had previously had static budgets. They were set once and locked in for the year. This resulted in departments meeting their budgets early and doing virtually nothing the rest of the accounting period. To address this imbalance, the company tossed out the static budget and developed a new one for each department of the next 18 months. And each month, real sales figures are analyzed against the plan and the budget is adjusted accordingly. Then the company adds another month into the budgeting plan. What type of budget this company is using?

Show Suggested Answer Hide Answer
Suggested Answer: B

Those items make up small portion of spend and the supply risk is low. So it is tactical item according to Kraljic portfolio matrix. Procurement should bundle these items into larger contracts, simplify procurement process.

LO 2, AC 2.1


by Belen at Nov 26, 2023, 02:45 PM

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Amber
9 months ago
Interesting approach, but will it really improve performance?
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Malcom
10 months ago
I disagree, it seems more like an activity-based budget.
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Elsa
10 months ago
Really? I thought rolling budgets were more complex.
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Sheridan
10 months ago
Definitely a rolling budget, great move!
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Leonora
10 months ago
Sounds like a rolling budget to me!
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Naomi
10 months ago
I thought it might be an activity-based budget at first, but the monthly adjustments really make me lean towards rolling budget now.
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Irene
11 months ago
I practiced a similar question, and I believe the key is that they adjust the budget regularly, which points to a rolling budget.
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Izetta
11 months ago
I'm not entirely sure, but I remember something about rolling budgets being flexible. This seems to fit that description.
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Alison
11 months ago
I think this sounds like a rolling budget since they keep adjusting it each month and adding new months.
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Avery
11 months ago
The question mentions the company "tossed out the static budget," so that rules out an incremental budget. And it's not zero-based since they're just updating the existing budget. I'll go with rolling budget.
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Armanda
11 months ago
I'm a bit confused by the details here. Is this an activity-based budget or a rolling budget? I'll need to think through the key differences to decide.
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Ryann
11 months ago
This sounds like a rolling budget to me. The company is updating the budget monthly and adding another month, which fits the description.
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Tennie
11 months ago
Okay, I think I've got it. The company is adjusting the budget each month based on actual sales, which means it's a rolling budget, not a static one. That makes sense.
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Jarod
11 months ago
This question seems straightforward, but I want to make sure I understand the key considerations for packaging. Designing modular, loosely coupled units of metadata sounds like a good strategy to keep things organized.
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Luis
11 months ago
activiti_admin: Based on the question, the admin username is probably related to the "activiti-app" application. I'll try "activiti_admin" as my answer.
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Veronica
11 months ago
Okay, I think I've got this. The key is to configure the AAA server group to authenticate the client properly.
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Octavio
1 year ago
I was going to say zero-based budget, but then I read the part about adjusting the budget monthly. That's a clear sign of a rolling budget. Nice catch!
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Casie
1 year ago
Definitely, it allows for more flexibility and better decision-making.
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Vilma
1 year ago
Yeah, that makes sense. With a rolling budget, you can adapt to changes more easily.
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Von
1 year ago
I think it's a rolling budget because they adjust it monthly.
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Tegan
1 year ago
Definitely a rolling budget. I remember learning about that in my finance class. Glad to see a company actually implementing it in practice.
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Dan
1 year ago
Rolling budgets definitely help in keeping departments engaged and focused throughout the year.
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Tamra
1 year ago
I agree, it's great to see a company taking a more dynamic approach to budgeting.
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Stanford
1 year ago
Yes, it's a rolling budget. It allows for more flexibility and adaptability.
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Roxane
1 year ago
The company is using a rolling budget, where they continuously update the budget based on real sales figures. Brilliant way to stay on top of things!
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Simona
1 year ago
Rolling budgets definitely help in keeping the company agile and responsive to changes in the market.
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Layla
1 year ago
That's a smart move to prevent departments from just sitting idle after meeting their budget early.
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Sylvia
1 year ago
Yes, they are using a rolling budget to stay flexible and adjust as needed.
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Tom
1 year ago
I'm not sure, but I think a rolling budget is more flexible and helps prevent departments from just sitting on their budgets.
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Dana
1 year ago
I agree with Sabine. A rolling budget allows for adjustments based on real sales figures.
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Sabine
1 year ago
I think the company is using a rolling budget.
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