chapter 32 budgets

Question 1

budgeting

Answer 1

planning future activities by establishing performance targets , especially financial ones

Question 2

budget holder

Answer 2

the individual responsible for the initial setting and achievements of a budget

Question 3

variance analysis

Answer 3

calculation of the differences between budgets and actual figures , and analysis of the reasons for such differences

Question 4

delegated budgets

Answer 4

budgets for which junior managers have been given some authority for setting and achieving

Question 5

incremental budgeting

Answer 5

uses last year’s budget as a basis, and an adjustment is made for the coming year

Question 6

zero budgeting

Answer 6

sets budgets to zero each year and budget holders have to argue their case for target levels and to receive any finance

Question 7

favourable variance

Answer 7

a change from the budget that leads to higher than planned profit

Question 8

flexible budgeting

Answer 8

cost budgets or each expense are allowed to vary if sales or output vary from budgeted levels

Question 9

adverse variance

Answer 9

a change from the budget that leads to lower than planned profit