Business 2 Budgeting Flashcards
What is the first budget to be produced during the budgeting process?
Sales budget
What is the last budget to be produced during the budgeting process?
Cash budget
True or false.
The annual business plan process typically begins with operating budgets that are driven by sales budgets that, in turn, provide the required variables for production, selling and personnel budgets. Financial budgets (including pro forma f/s and cash budgets) come at the end of the process and are prepared last.
True
True or false.
Cash budgets are typically derived from the operating budgets that assume accrual basis assumptions (e.g. credit sales and credit purchases).
True
What is a static budget based on?
Budgeted costs for budgeted output
True or false.
Selling and administrative budgets are difficult to allocate by month and are best presented as one number for the entire year.
False (usually based on sales and easy to allocate by month)
True or false.
Selling and administrative budgets need to be detailed in order that the key assumptions can be better understood.
True
Does the cash budget provide info concerning the need for internal financing?
No (external financing)
The info contained in a COGM budget would most directly relate to what four budgets?
- Materials used budget
- DL budget
- Overhead applied budget
- WIP inventories budget
Tactical plans are what type of planning tool?
Short term planning tool covering up to 18 months
Give an example of a type of single-use tactical plan.
Annual budget
Budgets frequently revolve around the development of what?
Standards
Standards have been referred to as what?
Per-unit budgets (integral to development of flexible budgets)
Ideal standards represent the costs that result from what?
Perfect efficiency and effectiveness in job performance
Currently attainable standards represent what?
Costs that result from work performed by employees w/ appropriate training and experience but w/o extraordinary effort
