Budgets (7) Flashcards

1
Q

Traditional budgeting process (goals)

A

Short-term focus. Fixed annual targets drive short-term actions with a view of meeting annual targets

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2
Q

Beyond budgeting process (goals)

A

Longer-term focus such as KPIs on sustained competitive success

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3
Q

Traditional budgeting process (Rewards)

A

Individual departments have to meet their own targets to gain rewards

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4
Q

Beyond budgeting process (Rewards)

A

Organisation is viewed as one team to emphasis learning and continual innovation

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5
Q

Traditional budgeting process (Plans)

A

Plans are difficult to change even if plans become unrealistic due to “predict and control”

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6
Q

Beyond budgeting process (Plans)

A

Future is unpredictable, so plans are continuously updated

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7
Q

Traditional budgeting process (Resources)

A

Process of allocating resources to operating units is centralised. Resources allocated to producys instead of new ideas as head offices are risk adverse

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8
Q

Beyond budgeting process (Resources)

A

Resources are allocated to strategic initiatives and are available on demand

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9
Q

Traditional budgeting process (Co-ordination)

A

Leaders attempt to coordinate plans by linking one functional budget to another. Often fails to meet customer needs as it’s centralised

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10
Q

Beyond budgeting process (Co-ordination)

A

Dynamic linking of customer demands to provide fast, seamless solutions that meet customer needs

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11
Q

Traditional budgeting process (Controls)

A

Performance reports are based on financial indicators. Which don’t give insight into root cause of the problem

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12
Q

Beyond budgeting process (Controls)

A

Strategic decisions are based on multi-level info, giving insight into future and past performance

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13
Q

Advantages of beyond budgeting?

A

Encourages innovation
Increases motivation
Allows faster responses to threats and opportunities

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14
Q

Disadvantages of beyond budgeting?

A

May be resistance to change from managers to employees to adopt such a culture

Needs a plan, even if there are a lot of uncertainties in the future

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15
Q

How may past data be used in preparation ob budgetsa?

A

As a starting point for preparation of budgets but other info form wide variety of sources is used

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16
Q

What is the principal budget factor?

A

Sales volume

17
Q

Where may sales forecast information come from? (Past)

A

Past sales patterns

18
Q

Where may sales forecast information come from? (Economic)

A

Enconmic environment

19
Q

Where may sales forecast information come from? (Results)

A

Results of market research

20
Q

Where may sales forecast information come from? (Advertising)

A

Anticipated advertising

21
Q

Where may sales forecast information come from? (Comp)

A

Competition

22
Q

Where may sales forecast information come from? (Consumer)

A

Changing consumer taste

23
Q

Where may sales forecast information come from? (Dis)

A

Distribution

24
Q

Where may sales forecast information come from? (Policies)

A

Pricing policies and discounts offered

25
Q

Where may sales forecast information come from? (Legislation)

A

Legislation

26
Q

Where may sales forecast information come from? (Env)

A

Environmental factors

27
Q

Sources of information for production budget (Labour)

A

Labour costs including idle time, overtime and standard output rates per hour

28
Q

Sources of information for production budget (Raw matertial)

A

Raw material costs including allowances for losses during production

29
Q

Sources of information for production budget (Machine hours)

A

Machine hours including expected idle time and expected output rates per machine hour

30
Q

In production budget information, what does a large part of the traditional work of cost accounting involve?

A

Attributing costs to the physical information produced