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Question 91 - CPIM-Part-2 discussion

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The production plan relates to a firm's financial planning because it is used to:

A.
calculate standard product costs.
Answers
A.
calculate standard product costs.
B.
determine variable costs.
Answers
B.
determine variable costs.
C.
project payroll costs.
Answers
C.
project payroll costs.
D.
identify future cash needs.
Answers
D.
identify future cash needs.
Suggested answer: D

Explanation:

The production plan is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan is the output of the supply planning step in the sales and operations planning (S&OP) process. The production plan relates to a firm's financial planning because it is used to identify future cash needs. Cash needs are the amount of money that a firm requires to operate and grow its business. Cash needs can be influenced by various factors, such as sales revenue, cost of goods sold, operating expenses, capital expenditures, inventory levels, accounts receivable, accounts payable, and taxes. The production plan can help to estimate the cash inflows and outflows associated with these factors, and to determine the optimal balance between them. The production plan can also help to identify the potential sources and uses of cash, such as borrowing, investing, or paying dividends. By identifying future cash needs, the production plan can help to improve the firm's liquidity, profitability, and solvency.

asked 16/09/2024
Saptarshi Biswas
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