MANAGEMENT

Detailed explanation-1: -An operating budget is a detailed projection of what a company expects its revenue and expenses will be over a period of time. Companies usually formulate an operating budget near the end of the year to show expected activity during the following year.

Detailed explanation-2: -Operating budgets include multiple parts like revenue, variable costs (such as payroll and cost of goods), and fixed costs (like rent and insurance). Other examples to consider when creating an operating budget are things like depreciation of assets, interest payments, and currency exchanges, if applicable.

Detailed explanation-3: -Operating budgets focus on the financial resources needed to support operations including cash receipts and disbursements, capital expenditures and financing. A participative approach is less likely to motivate people to work toward an organization’s goal than a top-down approach.

Detailed explanation-4: -Operating expenses are important because they can help assess a company’s cost and stock management efficiency. It highlights the level of cost that a company needs to make to generate revenue, which is the main goal of a company.