Budgets (7)

Question 1

Traditional budgeting process (goals)

Answer 1

Short-term focus. Fixed annual targets drive short-term actions with a view of meeting annual targets

Question 2

Beyond budgeting process (goals)

Answer 2

Longer-term focus such as KPIs on sustained competitive success

Question 3

Traditional budgeting process (Rewards)

Answer 3

Individual departments have to meet their own targets to gain rewards

Question 4

Beyond budgeting process (Rewards)

Answer 4

Organisation is viewed as one team to emphasis learning and continual innovation

Question 5

Traditional budgeting process (Plans)

Answer 5

Plans are difficult to change even if plans become unrealistic due to “predict and control”

Question 6

Beyond budgeting process (Plans)

Answer 6

Future is unpredictable, so plans are continuously updated

Question 7

Traditional budgeting process (Resources)

Answer 7

Process of allocating resources to operating units is centralised. Resources allocated to producys instead of new ideas as head offices are risk adverse

Question 8

Beyond budgeting process (Resources)

Answer 8

Resources are allocated to strategic initiatives and are available on demand

Question 9

Traditional budgeting process (Co-ordination)

Answer 9

Leaders attempt to coordinate plans by linking one functional budget to another. Often fails to meet customer needs as it’s centralised

Question 10

Beyond budgeting process (Co-ordination)

Answer 10

Dynamic linking of customer demands to provide fast, seamless solutions that meet customer needs

Question 11

Traditional budgeting process (Controls)

Answer 11

Performance reports are based on financial indicators. Which don’t give insight into root cause of the problem

Question 12

Beyond budgeting process (Controls)

Answer 12

Strategic decisions are based on multi-level info, giving insight into future and past performance

Question 13

Advantages of beyond budgeting?

Answer 13

Encourages innovation
Increases motivation
Allows faster responses to threats and opportunities

Question 14

Disadvantages of beyond budgeting?

Answer 14

May be resistance to change from managers to employees to adopt such a culture

Needs a plan, even if there are a lot of uncertainties in the future

Question 15

How may past data be used in preparation ob budgetsa?

Answer 15

As a starting point for preparation of budgets but other info form wide variety of sources is used

Question 16

What is the principal budget factor?

Answer 16

Sales volume

Question 17

Where may sales forecast information come from? (Past)

Answer 17

Past sales patterns

Question 18

Where may sales forecast information come from? (Economic)

Answer 18

Enconmic environment

Question 19

Where may sales forecast information come from? (Results)

Answer 19

Results of market research

Question 20

Where may sales forecast information come from? (Advertising)

Answer 20

Anticipated advertising

Question 21

Where may sales forecast information come from? (Comp)

Answer 21

Competition

Question 22

Where may sales forecast information come from? (Consumer)

Answer 22

Changing consumer taste

Question 23

Where may sales forecast information come from? (Dis)

Answer 23

Distribution

Question 24

Where may sales forecast information come from? (Policies)

Answer 24

Pricing policies and discounts offered

Question 25

Where may sales forecast information come from? (Legislation)

Answer 25

Legislation

Question 26

Where may sales forecast information come from? (Env)

Answer 26

Environmental factors

Question 27

Sources of information for production budget (Labour)

Answer 27

Labour costs including idle time, overtime and standard output rates per hour

Question 28

Sources of information for production budget (Raw matertial)

Answer 28

Raw material costs including allowances for losses during production

Question 29

Sources of information for production budget (Machine hours)

Answer 29

Machine hours including expected idle time and expected output rates per machine hour

Question 30

In production budget information, what does a large part of the traditional work of cost accounting involve?

Answer 30

Attributing costs to the physical information produced