B2: Budgeting & Analysis

Question 1

Define standards

Answer 1

per unit budgets that are important to making flexible budgets

Question 2

Define Ideal standards

Answer 2

cost from perfect efficiency and effectiveness in job performance

Question 3

Define Currently Attainable Standards

Answer 3

cost derived from employees with appropriate training and experience without extraordinary effort

*made for normal spoilage and downtime

Question 4

Authoritative standards

Answer 4

set exclusively by management

**implemented quickly

Question 5

Participative standards

Answer 5

set by management and certain individuals

Question 6

Define Master budget

Answer 6

documents specific short-term operating performance goals for a year or less

Question 7

Define operating budgets

Answer 7

established to describe DM,DL needed and resources needed to acquire

Question 8

What 4 types of budgets are included in Operating budgets?

Answer 8

1) Sales budgets
2) Production budgets
3) S & A
4) Personnel

Question 9

Define financial budgets

Answer 9

funds to be used in operations

Question 10

What is included in financial budgets?

Answer 10

1) Pro forma financial statements

2) cash budgets

Question 11

Characteristics of Sales budget

Answer 11

• foundation of entire budget

* * 1st prepared

Question 12

Formula for production budget

Answer 12

budgeted sales + Desired EI- beg inv

Question 13

Desired levels of inventory seek to balance …

Answer 13

lost sales with cost of maintaining inventory (carrying cost)

Question 14

Cost of DM to be purchased formula

Answer 14

units of DM purch. * cost per UI

Question 15

DM usage budget formula

Answer 15

beg inv. cost + purch - EI at cost

Question 16

DL budget

Answer 16

(budgeted production * hours to produce)* hourly wage rate

Question 17

Cost of goods sold formula

Answer 17

COGM + beg F.G. inv. - EI FG inv.

Question 18

What are the 3 types of cash budgets

Answer 18

1) Cash available
2) cash disbursement
3) Financing

Question 19

Cash budget formats

Answer 19

beg cash
\+ cash collections from sales
-cash disb. for purch & Op exp.
=ending cash
-cash to sustain operations
=desired ending cash balance