Budgeting Flashcards
What is a budget?
Budgets are plans of action for future periods
What are the functions of budgeting?
Planning annual operations
Coordinating activities of various parts of an organisation
Communicating plans
Motivating managers
Controlling activities
Evaluating manager performance
What is a conventional budget?
What is a zero based budget?
What are activity based budgets?
What are the stages in the budgeting process?
- Communicate objectives and strategy to those responsible for preparing the budget
- Communicate procedures
- Determine factors that restrict performance
- Initial budget preparation
- Negotiation
- Coordination and review of budgets
- Final agreement of budgets
- Review of budgets
What is the difference between the top down and bottom up approach in budget preparation
What is the sales budget?
The sales budget shows the planned quantities of each product to be sold and the intended selling price
What is the production budget?
Ensures that production is sufficient to meet sales demand and maintain economic inventory levels
What is the material usage budget?
What is the purchase budget
Used to purchase the planned quantities of raw materials necessary to meet production requirements
What is the labour cost budget
Provides the estimates of department labour hours required to meet planned production
What is the factory overhead budget
What is the selling and distribution cost budget
What is the cash budget
Translates plans into cash flows