Week 6 Flashcards
What is a budget?
A quantitative plan estimating when and how much cash or other resources will be received and how the cash or other resources will be used.
What is a budgeted balance sheet?
Estimated assets, liabilities, and equities that the company would have at the end of the year if their performance were to meet its expectations.
What is a budgeted income statement?
A statement similar to a traditional income statement except it contains budgeted data.
What is a capital asset budget?
A budget showing the organization’s plans to invest in long-term assets.
What is a cash budget?
A combined budget of all cash inflows and outflows of the organization.
What is a cash collections schedule?
A schedule showing when cash will be received from customers.
What is a cash payments schedule?
A schedule showing when cash will be used to pay for direct material purchases.
What is a financial budget?
A category of budgeting that details estimates for cash inflows and outflows through planned operations and changes capital investments of assets, liabilities, and equities.
What is a master budget?
The overall budget that includes the operating and financial budgets.
What is an operating budget?
A category of budgeting that helps managers plan and manage production, order materials, schedule direct labor, and monitor overhead expenses.
What is a sales budget?
A budget showing the expected sales in units and the sales price for the budget period.
What is a selling and administrative expense budget?
A budget showing the variable and fixed expenses estimated to be incurred in all areas other than production.
What are allocated costs?
Costs that are generated by non-revenue generating portions of the business, such as corporate headquarters, or that are assigned based on some formula to the revenue generating portions of the business.
What is an avoidable cost?
A cost that can be eliminated (in whole or in part) by choosing one alternative over another.
What is a bottleneck?
The point at which a constraint slows production.
What is differential analysis?
A type of analysis that considers only the differences between variables that are important to the analysis.
What is differential cost?
The difference between costs for alternatives.
What is differential revenue?
The difference between revenues for alternatives.
What is an irrelevant cost?
A cost that has no effect on the decision being made because it is the same under either alternative.
What is irrelevant revenue?
Revenue that has no effect on the decision being made.
What is normal capacity?
The company’s maximum production level, without adding additional production resources, or within the company’s relevant range.
What are opportunity costs?
Costs associated with not choosing the other alternative.
What is outsourcing?
The act of using another company to provide goods or services that your company requires.
What is a qualitative factor?
A component of a decision-making process that cannot be measured numerically.
