B4-M6 Budgeting 2 Flashcards
which costs are not affected by inflation?
depreciation expense
interest expense
what is flexible budget?
a flexible budget is a series of budgets based on different activity levels within the relevant range.
It allows comparison of actual results with a budget based on achieved volume and allows adjustment to the actual volume
It is appropriate for any activity that has variable costs
what is a master budget?
a master budget is an overall budget, consisting of many smaller budgets, that is based on one specific level of production
what is a capital budget?
it plans for the purchase of capital assets, which will only affect the operating budget through their subsequent effect on expense via depreciation
what is static budget?
a static budget is based on one level of activity, and it is not adjusted for actual units
