BUDGET AND BUDGETARY CONTROL

Question 1

WHAT IS BUDGET?

Answer 1

Detailed plans that coordinate various activities within a company in order to achieve a given objective

Question 2

BUDGETARY CONTROL?

Answer 2

A system of controlling costs which includes the preparation of budgets coordinating the departments
and to achieve maximum profitability.

Question 3

PURPOSE OF BUDGET

Answer 3

P.C.C.M.C.P

1. PLANNING
2. COORDINATION
3. COMMUNICATION
4. MOTIVATION
5. CONTROL
6. PERFORMANCE EVALUATION

Question 4

In the planning process:

Answer 4

a) establish fundamental objectives of the business
b) setting up policies to pursue such objectives
c) the plan designed should fit the objectives
D) ENSURE MANAGERS TO DO PLANNING FOR FUTURE OPERATIONS
E) MANAGERS MUST AND HAVE TO ANTICIPATE PROBLEMS B4 THEY ARISE

Question 5

In the coordination process:

Answer 5

a) Preparing & examining functional budgets
b) Finalizing budgets into the master budget
C) GIVE EVERY BUDGET TO EVERY department

Question 6

COMMUNICATION – deliver the plan to other responsibility center managers

Answer 6

all departments must be kept fully
informed of the firm’s plans, policies & constraints

The expectation of top management can be delivered to lower-level management TO ACHIEVE PRIMARY GOALS

Question 7

MOTIVATION – to achieve the firm’s goal

Answer 7

A budget provides a standard that a manager may be motivated to strive to achieve

ALSO, MOTIVATE MANAGER BEHAVIOUR AND TO MAKE HIM PERFORM WITH THE REALISTIC BUDGET

Question 8

CONTROL – firm’s activities

Answer 8

To ensure that actual result conform/ STICK to plan so that the best possibles result is obtained

TO MEASURING PERFORMANCE OF TE DIVISIONS AND EMPLOYEES

Question 9

In the control process:

Answer 9

Compare actual performance vs budgeted / plan.

Question 10

PERFORMANCE EVALUATION – manager’s performance

Answer 10

Evaluated by measuring the success in meeting the budgets.

Question 11

HIGH-LEVEL EXECUTIVES FUNCTION

Answer 11

Ensure budgets are realistically established & coordinated satisfactorily.

Question 12

BUDGET OFFICER – normally accountant

Answer 12

To coordinate the individual budgets into a budget for the whole firm

Question 13

ACCOUNTING STAFF

Answer 13

Assist manager in the preparation of the budget.

Example: advice on the instruction about
budget preparation, provide past information for preparing the present budget & ensure
manager submit budgets on time.

Question 14

DEFINITION OF BUDGETING

Answer 14

THE PROCESS OF PREPARING BUDGET AND CONTROL THE BUDGET ACTIVITIES

Question 15

CONTROLLING PROCESS OF BUDGETING

Answer 15

RELATE TO MANAGEMENT PROCESS INVOLVES PLANNING AND CONTROLLING

Question 16

BUDGETING PROCESS

Answer 16

1. COMMUNICATE DETAILS OF BUDGET POLICY
2. DETERMINE THE KEY BUDGET FACTORS
3. PREPARATION OF VARIOUS BUDGET
4. COORDINATION OF REVIEW OF BUDGETS
5. FINAL ACCEPTANCE BUDGETS AND IMPLEMENTATION
6. ONGOING REVIEW OF BUDGETS

Question 17

FUNCTIONS OF BUDGET COMMITTEE

Answer 17

1. ISSUE BUDGET YANG MANUAL (GUIDE, FORMAT, TIMEFRAME, CONTENTS, DETAILS )
2. PREPARE SCHEDULE FOR BUDGET PREPARATION
3. ASSIGNING RESPONSIBILITIES FOR FUNCTIONAL BUDGETS
4. PROVIDE INFORMATION FOR PREPARATION OF BUDGET
5. DO VARIANCE ANALYSIS ON BUDGET AND ACTUAL DATA
6. INVESTIGATION ON VARIANCE

Question 18

DEFINITION FUNCTIONAL BUDGET

Answer 18

DETAILED DESCRIPTION OF THE REVENUES AND COSTS IS REQUIRED TO ACHIEVED SATISFACTORY PROFIT

Question 19

EXAMPLES OF FUNCTIONAL BUDGETS

Answer 19

FOLLOW THE FLOW:

SALES - PRODUCTION - DIRECT MATERIAL USAGE - DIRECT MATERIAL PURCHASED - DIRECT LABOUR COST - PRODUCTION OH - PRODUCTION COST - NUDGETED INCOME STATEMENT

THESE BUDGETS ARE ALL RELATED BECAUSE DATA FROM ONE BUDGET IS IMPORTANT FOR USE ANOTHER BUDGET