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9 Cards in this Set
- Front
- Back
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controllability principle
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it relates to managers being held responsible only for those costs that they can significantly influence.
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standard costing
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it is cost control system in which the standard costs or a product or service are compared with the actual cost end variances ascertained and examined.
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standard costing advantages
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accuracy of budgets is improved.
cost consciousness is instilled. methods may be improved. permits detailed control analysis. provides a better costing and pricing basis than actual costs. |
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standard costing disadvantages
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setting am acceptable standard
inapplicability to varied output incorporating inflation cost of implementation and maintenance over emphasise operations |
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variances impact on profit/costs
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favourable variances have positive impact on profit and decrease cost between budget and actual
adverse variances have negative impact on profit and increase cost between budget and actual |
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virements definition
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transfer of monies from one budget head to another and can be used as a means of control.
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virements regulations
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specify who is allowed to exercise virements and any approval required
established the level in the budget where virements are permitted specify the maximum amount that could be transferred, either in absolute or percentage terms identify funding restricted in terms of virement identify items unsuitable for virement |
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profiling of budgets advantages
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profiles are based on patterns of known expenditure and income
not everything is spread on patterns of known expenditure and income not everything is spread evenly over the year, so comparing against twelfths may distort views on performance can be used to encourage the budget-holders to get involved enables better budgetary control and performance monitoring to be carried out |
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profiling of budgets disadvantages
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past expenditure and income patterns may not be typical of the future
profiling can be dangerous if budget-holders are not educated and involvedin the process |
