Term
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Definition
Quantitative expression of mgmts plans
- Used for planning (forecasting)
- Used for control (variances)
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Term
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Definition
| one year budget for next operating year (detailed) |
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Term
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Definition
looking forward 3-5 yearss
forecating budget |
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Term
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Definition
| fixed budget, not changing |
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Term
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Definition
| variable, static budget adjusted for actual activity. |
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Term
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Definition
| Rolling, comparing static to actual for month then adjust following months by comparison and adding in another month. |
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Term
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Definition
need to have a
probable- what you think will happen
best case- good economy
worst case-bad economy |
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Term
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Definition
| helps mgmt to understand where the money is going and how it is being used. |
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Term
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Definition
| accumulation of all divisional budgets |
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Term
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Definition
1. The Sales Budget
2. The Production Budget
3. Inventory Purchases
4. Direct materials Budget
5. Direct labor budget
6. Mfg overhead budget
7. Ending finished goods inv budget
8. Selling & admin budget
9. Cash Budget
10.Budgeted I/S & Balance sheet |
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Term
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Definition
| a detailed plan showing how cash will be acquired and used over a period of time. |
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Term
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Definition
| Steps taken by mgmt to increase likelihood that all parts of the organization are working together to acheive goals set in planning stage. |
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Term
| Responsibility accounting |
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Definition
| a system of accountability in which managers are held responsible for those items of revenue and cost that they control. |
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Term
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Definition
| key mgmt deliberates and produces a budget. |
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Term
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Definition
| bottom-up budget, many employees give input to the budget process. |
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Term
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Definition
| combination of participative and top-down. |
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Term
| Ways to estimating sales budget |
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Definition
-econometrics model
-correlate revenue to other factors
- "grassroots" survey customers
-guess |
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Term
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Definition
| padding the budget to hide inadequacy |
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Term
| Relevent Range of fixed cost in budget |
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Definition
| Fixed cost stays the same in the budget as long as it is within the standards stated by activity level |
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Definition
| decision making is dipersed throughout the company. |
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Term
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Definition
-cost center
-revenue center
-profit center
-investment center |
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Term
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Definition
| part of company that uses resources (provide product or services) |
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Term
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Definition
| part of company that generates revenue (sales) |
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Term
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Definition
| The entire organization is responsible for (sales-costs)in the company divisions |
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Term
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Definition
| assets of the company generating a return (the plant or equipment) |
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Term
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Definition
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Term
Return on investment
(ROI) |
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Definition
Margin x Turnover
operating income/ operating assets |
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Term
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Definition
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Term
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Definition
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Term
Economic value added (EVA)
Residual Income |
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Definition
the money generated to carry the cost of financing debt or equity.
Operating income - (assets * COC) |
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Term
| Why not pay bonus for high ROI or give stock options |
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Definition
-may cause short sightedness
-may skimp on assets or repairs
-if giving bonus, pay part for ROI for year and part for the long-term average.
- stock options are instant money after vesting period and still cause short sightedness |
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Term
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Definition
| one division of a company sells a component to another division of a company, this is called |
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Term
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Definition
-cost
-cost+
-negotiated
-mkt value |
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