Su 5 Budgeting Concepts And Forecasting Techniques.

Front 1

A budget is a tool that satisfies what 4 needs?

Back 1

1. Planning
2. Control
3. Motivation
4. Communication

Front 2

Budgetary slack

Back 2

an overestimation of expenses that must be avoided.

Front 3

What is the starting point for any organizations planning process?

Back 3

The mission statement

Front 4

Budget planning calender

Back 4

The schedule of activities for the devleopment and adoption of the budget.

Front 5

Strategic plan

Back 5

The means by which the firm expects to fulfill its mission statement.

Front 6

Participation in the budget process : Board of directors

Back 6

they begin the budget process by formulating the mission statement.

Front 7

Participation in the budget process : Senior management

Back 7

Translate the mission statement into a strategic plan with measurable, realizable goals.

Front 8

Participation in the budget process : budget committee

Back 8

composed of top management to draft the budget calender and budget manual. they review and approve departmental budgets submitted by operating managers.

Front 9

Participation in the budget process : Middle and lower management

Back 9

recieve budget instructions, draw up departmenal budgets in conformity with the guidelines and submit them to the budget committee.

Front 10

Top- down budgetinig

Back 10

imposed by upper management and therefore has less of a chance of acceptance by those on whom the budget is imposed.

Front 11

Bottom-up budgeting

Back 11

characterized by general guidance from the highest levels of management, followed by extensive input from middle to lower management.

Front 12

Strategic time frame for a budget

Back 12

Concern senior managers and have time frams of up to 10 years or more

Front 13

Intermediate time frame for a budget

Back 13

concern middle managers and have time frames of up to 2 years.

Front 14

Operational time frames

Back 14

concern lower-level managers and generally have time frames of 1 month to 1 year.

Front 15

External factors on the budgeting process

Back 15

1. General Economic Conditions
2. Industry situation

Front 16

Standard costs

Back 16

predetermined expectations about how much of a unit of input, a unit of output, or a given activity should cost.

Front 17

Activity analysis

Back 17

indentifies, describes, and evaluates the activities that go into producing a particular output.

Front 18

Theoretical standards

Back 18

Standard costs that are set for production under optimal conditions. For this reason, they are also called perfection or maximum efficiency standards.

Front 19

Currentaly attainable standards

Back 19

the performance that is expected to be achieved by reasonably well-trained workers with an allowance for noraml spoilage, waste and downtime.

Front 20

Authoritative standard setting

Back 20

Ensures total consistency across all functional areas. It is also far less complex and time consuming than coordinating input from the middle and lower levels.

Front 21

Participative (bottom up) standard setting

Back 21

uses input from the middle and lower level employees.
This standard setting comes from a broader information base, but the the quality of participation is affected by the goals values, beliefs and expectations of those involved.

Front 22

Qualitative methods

Back 22

rely on the manager's experience and intuition

Front 23

Quantitative methods

Back 23

Use mathematical models and graphs

Front 24

Y= a + bx

what is Y

Back 24

The dependent Variable

Front 25

Y= a + bx

What is A

Back 25

The constant Coefficient

Front 26

Y= a +bx

What is B

Back 26

The Variable coefficient

Front 27

Y= a +bx

What is x

Back 27

The independent variable

Front 28

What are other names for the master budget.

Back 28

the comprehensive budget/annual profit plan.

Front 29

What is the emphasis of the operating budget

Back 29

Obtaining and using current resources.

Front 30

What is the order of the operating budget

Back 30

1. Sales
2. Production
3. Direct Materials
4. Direct Labor
5. Manufacturing Overhead
6. Ending finished Goods Inventory Budget
7. Cost of goods sold
8. NonManufacturing budget
9. Proforma Income Statement

Front 31

What is the order of the NonManufacturing budget

Back 31

1. Research and Development
2. Design
3. Marketing
4. Distribution
5. Customer Serviice
6. Administrative

Front 32

What is the emphasis of the financial budget

Back 32

The emphasis is on obtaining the funds needed to purchase operating assets.

Front 33

What is contained in the Financial budget?

Back 33

1. Capital Budget
2. Projected cash disbursement schedule
3. Projected cash collection schedule
4. Cash Budget
5. Pro forma balance sheet
6. Pro forma statement of cash flows

Front 34

Project budget

Back 34

A budget with all the costs expected to attach to a particular project.

Front 35

Activity based budgeting

Back 35

a budget that applies activity based costing principles to budgeting. Its greatest effect is on the application of indirect costs.

Front 36

What is the key to successful activity based budgeting?

Back 36

Selecting a driver for each pool that has a direct cause-and-effect realtionship wit the level of activity in that pool

Front 37

Zero Based budgeting

Back 37

a budget and planning process in which each manager must justify his/her departments budget every budget cycle.

Front 38

How is a Zero Based budget built?

Back 38

A manager must buidl the budget every year from a base of zero. All expenditures must be justified regardless of variance from previous years.

Front 39

What is the major limitation of Zero Based Budgeting?

Back 39

It requires more time and effort to prepare than a traditional budget.

Front 40

What are some of the advantages to actiity based budgeting

Back 40

Better identification of resource needs.
Linking of costs to outputs
identification of budgetary slack.

Front 41

Flexible budget

Back 41

A plan that is created using budgeted revenue and costs but is based on the actual units of output.

Front 42

Static Budget

Back 42

Based on only one level of sales or production

Front 43

Flexible budget

Back 43

a series of budgets prepared for many levels of activity.