Question

ERP systems store vast quantities of information about the materials and equipment, labour, power, maintenance, and setups needed to manufacture different products. This helps simplify the budgeting process as ERP systems ________.

A) can quickly calculate the manufacturing and nonmanufacturing costs based on a given sales quantity.
B) automatically identify and record changes in processes involved in producing products.
C) identify which underlying assumptions are likely to change.
D) Always use a rolling budget, ensuring that a budget is always available for a specified future period.
Objective 6.4

Answer 1

ERP systems simplify the budgeting process by quickly calculating costs, identifying process changes, and highlighting underlying assumptions that may change. They store detailed information about materials, equipment, labor, power, maintenance, and setups needed for manufacturing.

Step-by-step explanation:

ERP (Enterprise Resource Planning) systems store vast quantities of information about the materials, equipment, labor, power, maintenance, and setups needed to manufacture different products.

This information helps simplify the budgeting process in several ways:

1. They can quickly calculate the manufacturing and nonmanufacturing costs based on a given sales quantity. By having detailed data on production inputs and costs stored in the ERP system, the system can perform calculations to estimate the total cost of manufacturing products based on the desired sales quantity. This helps in budgeting for production costs.
   
   
2. They automatically identify and record changes in processes involved in producing products. ERP systems can track updates and changes in manufacturing processes and automatically record them. This helps in keeping the budgeting process up to date with any changes in materials, labor, or equipment requirements.
   
   
3. They identify which underlying assumptions are likely to change. ERP systems can analyze historical data and patterns to identify trends and forecasts related to production inputs and costs. This helps in identifying which assumptions may need to be adjusted in the budgeting process to reflect changing conditions.

Overall, ERP systems play a crucial role in simplifying the budgeting process by providing accurate and up-to-date information on production inputs, costs, and any changes or trends that may impact budgeting decisions.