Pick three of the key terms that appears and briefly discuss it using your own w
ID: 2339914 • Letter: P
Question
Pick three of the key terms that appears and briefly discuss it using your own words. Your response must consist of at least three sentences.
Key Terms:
Administrative expense budget
Budget committee
Budget director
Budgetary slack
Budgets
Capital expenditures budget
Cash budget
Continuous budget
Control
Controllable costs
Direct labor budget
Direct materials purchases budget
Dysfunctional behavior
Effectiveness
Efficiency
Ending finished goods inventory budget
Feature costing
Financial budgets
Flexible budget
Flexible budget variances
Goal congruence
Incentives
Incremental approach
Marketing expense budget
Master budget
Myopic behavior
Operating budgets
Overhead budget
Participative budgeting
Production budget
Pseudoparticipation
Research and development expense budget
Rolling budget
Sales budget
Static budget
Variable budget
Zero-base budgeting
Control limits
Currently attainable standards
Direct labor efficiency variance (LEV)
Direct labor rate variance (LRV)
Direct materials price variance (MPV)
Direct materials usage variance (MUV)
Favorable (F) variance
Fixed overhead spending variance
Fixed overhead volume variance
Ideal standards
Kaizen standards
Mix variance
Price (rate) variance
Price standards
Quantity standards
Standard bill of materials
Standard cost per unit
Standard cost sheet
Standard hours allowed
Standard quantity of materials allowed
Total budget variance
Unfavorable (U) variance
Unit standard cost
Usage (efficiency) variance
Variable overhead efficiency variance
Variable overhead spending variance
Yield variance
Explanation / Answer
Answers
>Cash Budget is prepared based on the estimate of cash that will be received and the cash that will be disbursed.
>It is also prepared to figure out if there will be any shortfall or deficit in the availability of Cash Balance.
>Cash Budget is prepared for future period(s)
>It contains particulars like beginning cash balance, Cash received from sales, Cash paid for expenses, Cash received from loans, ending Cash balance.
>This variance refers to the difference between Standard Cost and Actual Cost as a result of difference between actual hours worked and standard hours.
>The formula for calculating LEV = (Standard hours for actual output – Actual hours worked) x Standard rate per labor hour.
>If above result is Positive, the Variance is a Favourable Variance, otherwise, the same is an Unfavourable Variance.
>This Variance is used in Variance Analysis to know how much has the ‘efficiency’ of labor force has led to the difference between budgeted standard cost and actual cost.
>Production Budget is also prepared for future period(s).
>It deals with the quantity of units to be produced in future, based on certain estimates.
>It forms the basis for Direct material Budget, Direct Labor Budget, etc
>The resultant figure depends on various factors like Budgeted Sales, Quantity of ending inventory desired, Beginning inventory.
>The format is as follows:
Jan
Feb
Mar
Budgeted units to be sold
XXX
XXX
XXX
Add: Desired ending Inventory
XXX
XXX
XXX
Total needs
XXX
XXX
XXX
Less: Beginning Inventory
XXX
XXX
XXX
Units to be produced
XXX
XXX
XXX
Jan
Feb
Mar
Budgeted units to be sold
XXX
XXX
XXX
Add: Desired ending Inventory
XXX
XXX
XXX
Total needs
XXX
XXX
XXX
Less: Beginning Inventory
XXX
XXX
XXX
Units to be produced
XXX
XXX
XXX