33 Budgets

Question 1

Define budget

Answer 1

budgeting provides a target for costs or revenue that a business or department must aim to reach over a given period of time.

Question 2

Define zero based budget

Answer 2

A zero based budget means the budget will be set to zero at the start of each year and the udget holder will need to justify all money that is allocated to it.

Question 3

Define budgetery control

Answer 3

budgetery control involves a business using budgets to look into the future, stating what it wants to happen, and then deciding how to achieve these aims.

Question 4

Define budget based on historical data

Answer 4

a budget based on historical data wills set targets according to the amount spent in previous years.

Question 5

Define variance analysis

Answer 5

variance analysis shows the difference between budgeted and actual figures. It can be calculated at the end of a financial period, once actual figures are known.

variance = actual income - budgeted income

Question 6

Define favouable variances

Answer 6

faourable variances occur when the actua figures are better than the budgeted figures.

Question 7

Define adverse variances

Answer 7

adverse variances occur when the actual figures are worse than the budgeted figure.

Question 8

Define sales budget

Answer 8

sales budget is a firms planned sales for future a period of time, which can be measured in terms of sales volume and revenue.

Question 9

Define production cost budget

Answer 9

production cost budget is a firms planned production costs for a future period of time.

Question 10

Define historical figures

Answer 10

historical figures are quantitative information based on past trading records.

Question 11

Define oportunity cost

Answer 11

opportunity cost is when choosing different alternatives, this is the benefit lost from the next best alernative to the one chosen.