B2: Budgeting & Analysis Flashcards
Define standards
per unit budgets that are important to making flexible budgets
Define Ideal standards
cost from perfect efficiency and effectiveness in job performance
Define Currently Attainable Standards
cost derived from employees with appropriate training and experience without extraordinary effort
*made for normal spoilage and downtime
Authoritative standards
set exclusively by management
**implemented quickly
Participative standards
set by management and certain individuals
Define Master budget
documents specific short-term operating performance goals for a year or less
Define operating budgets
established to describe DM,DL needed and resources needed to acquire
What 4 types of budgets are included in Operating budgets?
1) Sales budgets
2) Production budgets
3) S & A
4) Personnel
Define financial budgets
funds to be used in operations
What is included in financial budgets?
1) Pro forma financial statements
2) cash budgets
Characteristics of Sales budget
- foundation of entire budget
* * 1st prepared
Formula for production budget
budgeted sales + Desired EI- beg inv
Desired levels of inventory seek to balance …
lost sales with cost of maintaining inventory (carrying cost)
Cost of DM to be purchased formula
units of DM purch. * cost per UI
DM usage budget formula
beg inv. cost + purch - EI at cost
DL budget
(budgeted production * hours to produce)* hourly wage rate
Cost of goods sold formula
COGM + beg F.G. inv. - EI FG inv.
What are the 3 types of cash budgets
1) Cash available
2) cash disbursement
3) Financing
Cash budget formats
beg cash \+ cash collections from sales -cash disb. for purch & Op exp. =ending cash -cash to sustain operations =desired ending cash balance
