Budgetary responsibilities Flashcards
Incremental budget
Prepared by taking the budget for the previous period and simply adding a percentage to reflect expected increases in volume and prices
Contingency based budget
To deal with unexpected financial problems that arise suddenly, incorporates risk factors into the budget.
Activity based budget
Work is carried out initially to identify the causes of costs within the organisation.
Priority based budget
Working with the resources available as a starting point rather than previous years expenditures.
Zero based budget
A budget that starts at zero every year, it requires managers to justify every item of expenditure (opposite of incremental)
Rolling budget
Amending the budget each month to account for developing circumstances in the marketplace.
Top down budget
Senior management setting the budget with little/no input from lower level staff.
Bottom up budget
Each department setting its own budgets of what they think they can achieve, which is then passed on to senior managers to review and agree.
Variance Analysis
Process of measuring actual results against a flexed budget to identify whether performance is better or worse than expected.
Sensitivity analysis
Where an individual variable within a budget is adjusted to see the effect on performance.
Flexible budget
Where the budget is changed to reflect a different volume of activity.
Budget committee
Budget accountant
Departmental managers/budget holders
