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ACG 2071 Exam 3 (FSU Sudano) (1).
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ACG 2071 Exam 3 (FSU Sudano) (1).
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ACG 2071 Exam 3 (FSU Sudano)Budget definition - ANS-A written plan outlining how much money a firm intends to
make, borrow, spend, etc. within some specific time period (usually a year)
Firms should budget because... - ANS-1) it forced managers to think ahead
2) it spells out management's plans and coordinates everyone's activities
3) it creates a benchmark for future performanc
3 types of budgeting - ANS-1) continuous - perpetually updated so that the budget
always contains 12 months
2) zero-based - every year the budget restarts from 0
3) participative - all levels of management give input on the budget (incentive to build
slack - under-estimate revenues and over-estimate expenses)
2 sub-budgets within the master budget: - ANS-1) operating budget
2) financial (cash) budget
Budgeting formula - ANS-what goes out + ending - beginning = what you need
Standard cost formula - ANS-DM + DL + OH
Estimated cash collections come from... - ANS-Sales
Estimated cash disbursements come from... - ANS-Purchases
Estimated accounts receivable balance come from... - ANS-Sales
Estimated accounts payable balance come from... - ANS-Purchases
Master budget variance is also called: - ANS-Static budget variance
Revenue variance is also called: - ANS-Spending variance OR flexible budget variance
Activity variance is also called: - ANS-Volume variance OR sales variance
Price (rate) variance = - ANS-I ap-sp I x aq
Quantity (usage or efficiency) variance = - ANS-I aq-sq I x sp
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