The correct answer is: Both A and B.
A principal budget factor is a factor that has a major influence on the amount of money that is allocated to a particular budget item. Limiting factors are factors that restrict the amount of money that can be spent on a particular budget item.
For example, if a company is planning to launch a new product, the principal budget factor might be the cost of research and development. The limiting factor might be the amount of money that the company has available to spend on research and development.
In this case, both the principal budget factor and the limiting factor would determine the priorities of the functional budget. The company would need to allocate enough money to cover the cost of research and development, but it would also need to make sure that the budget for other items, such as marketing and sales, was not too high.
Here is a brief explanation of each option:
- Principal Budget Factor is a factor that has a major influence on the amount of money that is allocated to a particular budget item. For example, if a company is planning to launch a new product, the principal budget factor might be the cost of research and development.
- Limiting Factor is a factor that restricts the amount of money that can be spent on a particular budget item. For example, if a company is planning to launch a new product, the limiting factor might be the amount of money that the company has available to spend on research and development.
- Both A and B. In this case, both the principal budget factor and the limiting factor would determine the priorities of the functional budget. The company would need to allocate enough money to cover the cost of research and development, but it would also need to make sure that the budget for other items, such as marketing and sales, was not too high.
- None of the above. This option is not correct because both the principal budget factor and the limiting factor would determine the priorities of the functional budget.