Term
| activity-based budgeting (ABB) |
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Definition
| A budgeting process that is based on activities and associated activity costs to support production and sales; an extension of the traditional form of activity-based costing (ABC) |
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Term
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Definition
| A detailed plan for the acquisition and use of financial and other resources over a specified period of time—for example, a year, a month, or a quarter |
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Term
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Definition
| The difference between budgeted performance and expected performance; a “cushion” managers intentionally build into budgets to help ensure success in meeting the budget |
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Term
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Definition
| The process of preparing one or more budgets |
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Term
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Definition
| A process of identifying, evaluating, selecting, and controlling an organization’s capital investments (i.e., its long-term projects and programs) |
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Term
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Definition
| A schedule depicting the effects on cash of all budgeted activities |
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Term
| direct materials purchases budget |
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Definition
| A budget that shows the physical amount and cost of planned purchases of direct materials |
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Term
| direct materials usage budget |
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Definition
| A plan that shows the amount and budgeted cost of direct materials required for planned production |
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Term
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Definition
| Budgets that identify and relate to sources and uses of funds for planned operations and capital expenditures |
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Term
| fixed-performance contract |
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Definition
| An incentive compensation plan whereby compensation (reward) is a function of actual performance compared to a fixed (budgeted) target |
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Term
| gaming the performance measure |
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Definition
| Non-value-adding actions taken by managers to improve indicated performance |
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Term
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Definition
| The consistency between the goals of the firm, its subunits, and its employees. It is achieved when the manager acts independently in such a way as to simultaneously achieve personal objectives and those of top management |
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Term
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Definition
| A budgeting approach that incorporates continuous improvement expectations in the budget |
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Term
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Definition
| A plan that identifies actions required during the 5- to 10-year period covered by the plan to attain the organization’s strategic goals |
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Term
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Definition
| A set of machines, typically laid out in the form of a semicircle, needed to produce a particular product or part |
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Term
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Definition
| An aggregation of all subunit budgets into an integrated plan of action for the budget period |
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Term
| merchandise purchases budget |
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Definition
| A budget that shows the amount (and cost) of merchandise a firm plans to purchase during the budget period |
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Term
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Definition
| Plans for all phases of operation, including production, purchasing, personnel, and marketing budgets |
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Term
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Definition
| Theoretical capacity reduced by normal output losses due to personal time, normal maintenance, and so on; the measure of capacity used to estimate cost-driver rates under ABC and TDABC systems |
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Term
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Definition
| A budget showing planned output (production) for an upcoming period |
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Term
| relative performance contracts |
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Definition
| Contracts that reward managers for performance based on a comparison of actual results with specified benchmarks, not budgeted (fixed) targets; contrast with fixed-performance contracts |
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Term
| rolling financial forecast |
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Definition
| A constant planning horizon with the use of regularly updated forecasts |
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Term
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Definition
| A schedule showing forecasted sales, in units and dollars, for an upcoming period |
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Term
| strategic budget expenditures |
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Definition
| Planned spending on projects and initiatives that lead to long-term value and competitive advantage |
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Term
| time-driven activity-based budgeting (TDABB) |
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Definition
| A method of budget preparation used in conjunction with a time-driven activity-based cost (TDABC) system |
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Term
| zero-base budgeting (ZBB) |
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Definition
| A budgeting process that requires managers to prepare budgets each period from a base of zero |
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