Answer (D) is correct . Several planning assumptions should be made at the beginning of the budget process. Some of these assumptions are internal factors; others are external to the company. External factors include general economic conditions and their expected trend, governmental regulatory measures, the labor market in the locale of the company’s facilities, and activities of competitors, including the effects of mergers.
Answer (A) is incorrect because Changes in management is an internal factor.
Answer (B) is incorrect because Employee compensation is an internal factor.
Answer (C) is incorrect because A new product line is an internal factor.
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