#9 Flashcards
Budget
A budget is a detailed plan for the acquisition and use of financial and other resources over a specified time period. Provide a means of communicating management’s plan throughout the organization
The participative budget
Individuals at all levels of the organization are recognized as members of the team whose views and judgements are valued by top management. You decentralize prnparatio of the budget to lower levels which have knowledge of the departments.
Top-down approach
Budget is made by top-management.
Consideration chosing budget method
With smaller businesses, there may not be as large of a disconnect between the upper-level executives and the lower-level managers. In this situation, it may make sense to use the top-down budgeting method so that time can be saved. As your company starts to grow, you may have to consider getting more input from the managers of the departments in your business
Static budget
A budget designed for only one level of activity.
Flexible budget
A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to compare to actual costs incurred. It changes is based on volume! It provide a greater level of control.