budgeting

Question 1

A budget

Answer 1

a companies business plan

Question 2

department mangers

Answer 2

makes budgets

Question 3

more people involved and levels involved in making the budget

Answer 3

more participation

Question 4

Fiscal years

Answer 4

set by the organization
12 month duration

Question 5

accounting period

Answer 5

monthly or quarterly inventory.

Question 6

master budget

Answer 6

contains, capital and operating budgets

Question 7

operating budget

Answer 7

most managers responsible for maintaining and meeting, from a period to period basis,
project income and alocate the funds

Question 8

Fixed budget

Answer 8

based on previous year’s budget
firm projections
public institutions

Question 9

flexible budget

Answer 9

based on previous year
provides a dollar range for low to high levels of predicted activity

Question 10

zero based budget

Answer 10

start over from scratch each year
forces management to examine structure
time consuming
healthcare is resistant to use

Question 11

Categories of operating budget

Answer 11

1. revenue budget
2. expense budget

Question 12

revenue budget

Answer 12

can have multiple areas of revenue coming in
Project both price and volume
* as price increases, volume goes down.

Question 13

expense budget

Answer 13

may not cover cost but must be in organizational budget

Question 14

Steps in budget planning:
Evaluation

Answer 14

dissect an operation’s past performance

Question 15

Steps in budgeting process: Preparation phase

Answer 15

use dissected information to forecast

Question 16

favorable variance

Answer 16

preferred, such as higher
sales than budgeted,

Question 17

budget variance

Answer 17

budget variance is the difference between the actual and
budgeted dollars on one of the budget lines

Question 18

calculate variance:

Answer 18

Actual dollars − Budgeted dollars = Variance

Question 19

alculate variance percentage

Answer 19

Actual − Budgeted dollars/Budgeted dollars ×100 = Variance percentage
$23,650 − $21,450/
$21,450 ×100 = 10%

Question 20

Calculate the Payback Period