Term
| Three primary roles of the budget |
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Definition
1 planning
2 coordination
3 control |
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Term
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Definition
| a plan for using limited resources |
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Term
| How do budgets effect planning? |
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Definition
| budgets promote the use of organizational wide planning compelling managers to make the best decisions |
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Term
| How do budgets effect coordination? |
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Definition
| allows for different branches of an organization to work together with one cohesive plan |
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Term
| How do budgets effect Control? |
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Definition
| provides a frame of reference and a way to compare for measure of success rate |
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Term
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Definition
| quantify the outcomes of operating budgets in summary financial statements |
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Term
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Definition
| budgets which bridge short term and long term decisions in order to achieve their goals |
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Term
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Definition
| a plan that presents the expected revenues, costs and profit corresponding to the expected sale volume as of the beginning of that period |
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Term
| Centralized Decision Making |
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Definition
| a situation in which only one person is making all of the decisions for an organization |
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Term
| Decentralized Decision-Making |
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Definition
| environments where tasks are delegated to individuals with specific skills and they make the decisions |
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Term
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Definition
| first step in preparing a master budget. calculates expected revenue from a period |
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Term
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Definition
| 2nd step in Master Budget. Budget combines demand info from revenue budget with companies inventory policy |
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Term
| Making a Master Budget order |
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Definition
1 Revenue or sales
2 Production
3 Direct Labor
4 Direct Materials usage
5 Materials purchased budget
6 Manufacturing overhead
7 Variable cost of goods manufactured
8 Cash Budget |
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Term
| Why is the budgeting process iterative |
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Definition
| it is iterative because many different branches of the company will rework their budgets multiple times. |
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Term
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Definition
| allows companies to determine whether they will have enough money on hand to sustain projected operations |
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Term
| Cash Budgets three main components |
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Definition
1 inflows from operations
2 outflows from operations
3 special items |
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Term
| Responsibility Accounting |
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Definition
| refers to concepts surrounding decentralization |
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Term
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Definition
| a organizational subunit. |
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Term
| Three Types of responsibility centers |
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Definition
1 Cost centers
2 Profit Centers
3 Investment Centers |
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Term
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Definition
| an organizational unit that has control over the costs incurred in offering products or services. A production plant |
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Term
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Definition
| Organizational unit that has control over both revenue and cost. A region or a product line |
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Term
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Definition
| organizational unit that has control over revenues, costs, and long term investment decisions. A stand alone division |
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Term
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Definition
| Senior mangers finalize the budget with little input from lower organizational levels. One advantage of this is it is not time consuming. This is more suitable for smaller organization and centralized ones |
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Term
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Definition
| process that encourages organizational wide input in regards to a budget. this can increase employees determination to complete goals that they helped make. This can be a very time consuming process, so many firms implement a combo of both |
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Term
| A goal should be set at a level that is |
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Definition
| tight but attainable. Not to easy but not to difficult. |
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Term
| Incremental Approach to Budgeting |
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Definition
| the idea of using previous years budgets and changing them to meet the needs of current budgets. However this may be easy it can also lead to ratcheting and laziness in the work force |
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