Chapter 6: Budgetary Control - Making comparisons

Question 1

Budgetary Control

What is ‘control’?

Answer 1

Control is the process of using a budget to make comparisons against actual results.

We compare ‘like for like’

Question 2

What is a fixed budget?

Answer 2

Fixed budget is a single budget drawn up at the start of the year and based on the budgeted sales and production volumes

Question 3

What is a flexible budget?

Answer 3

Flexible budget is drawn up at the start of the year and involves a series of budgets based on various different sales and production volumes, showing a number of different potential outcomes.

Question 4

What is a flexed budget ?

Answer 4

Drawn up at the end of the year ans based upon the actual sales and production volumes but using the budgeted unit revenues and costs