Chapter 5 Flashcards
What is the participative approach?
An approach to budgeting where employees are involved in the planning.
What is a negotiated budget?
An approach to budgeting where top and lower-level management contribute equally in the process.
Name the 7 purposes of budgeting:
Planning, co-ordination, communication, authorisation, cost control, motivation, and performance evaluation.
What is the SMART method of achievable budgeting?
S- Specific and simple
M - Measurabe
A- Achievable, ambitious, actionable
R - Relevant
T - Time restrictions
True or false: performance evaluation and variance alaysis are done periodically.
True.
What are KPI’s?
Key performance indicators. They are a measurement which evaluates how an organisation executes its strategic vision.
Whats the difference between non-financial and financial measures?
Non-financial measures are numerical but not expressed in currency. Financial measures are numerical and are expressed in currency.
What is the formula to measure capacity percentage?
Actual output / potential output x 100
What is the formula to calculate idle time (time where employees are not working but still need to be paid)?
budgeted production time - actual production time
What is the formula to calculate idle time PER EMPLOYEE?
Total idle time / nr of employees
What is the formula for productivity per labour hour?
Output in the period / total hours worked in the period
What is the formula for productivity per employee?
Output in the period / total nr of employees working on output
What is the formula for labour cost per unit?
(Direct labour hour rate x Time for producing 1 unit) / total nr of units produced
