Aspects Of Budgeting

Question 1

What is a budget ?

Answer 1

It is a financial plan that is prepared in advanced, used to estimate revenue and costs of a business

Question 2

What type of budget remains the same no matter the level of activity ?

Answer 2

Fixed budget

Question 3

What type of budget changes with the level of activity and takes into account different cost behaviour patterns ?

Answer 3

Flexible budget

Question 4

If a business was creating a new product and didnt know how sucessfull the product would be, would they use a fixed budget or a flexible budget ?

Answer 4

Flexible budget

Question 5

Semi-variable costs have fixed and variable aspects, what equation / formula is used to seperate the aspects ?

Answer 5

You use the high low method

Question 6

Differences between the budgeted costs and the actual costs are called ?

Answer 6

Variances

Question 7

The information you need to find the variance between the revenue is the actual revenue and the budgeted revenue. What is the equation to find the vairiance ?

Answer 7

Actual revenue - budgeted revenue

Question 8

The information you need to find the variance between the costs is the actual costs and the budgeted costs. What is the equation to find the variance ?

Answer 8

Budgeted cost - actual cost

Question 9

Favorable or adverse variances

When actual costs are lower than budgeted costs the variance is …………….. ?

Answer 9

Favourable

Question 10

Favorable or adverse variances

Wheen actual revenues are higher than the budgeted revenues the variance is ……………… ?

Answer 10

Favourable

Question 11

Favorable or adverse variances

When the actual profit is higher than the budgeted profit the variance is ……………. ?

Answer 11

Favourable

Question 12

Favorable or adverse variances

When the actual costs are higher than the budgeted costs the variance is ……………?

Answer 12

Adverse

Question 13

Favorable or adverse variances

When the actual revenue is lower than the budgeted revenue the variance is …………….. ?

Answer 13

Adverse

Question 14

Favorable or adverse variances

When the actual profit is lower than the budgeted profit the variance is …………….. ?

Answer 14

Adverse

Question 15

An acceptable percentage variance on the budgeted amount is called ?

Answer 15

Tolerance limit

Question 16

What type of budget is continually kept up to date by adding a new budget period once the most recent one is completed ?

Answer 16

Rolling budget