Budgeting

Question 1

Effective utilization of available resources to achieve objectives of an org.
Makes to think longer-terms rather than short-term, day–to-day management
Blueprints that guide execution
Strategic planning
Allow management to better monitor spending
Allows managers to determine ‘ineffective’ (extravagant) expenditures.
Communicate financial plans to key stakeholders

Answer 1

reasons to budget

Question 2

Total revenue= total cost

Answer 2

Break-even analysis

Question 3

What attendance level is needed to have a viable event?

Answer 3

break even analysis

Question 4

_____ cost changes as sales and attendance change

_____cost remains stable

Answer 4

variable

fixed

Question 5

Price (e.g. registration fee) –variable cost per unit

Answer 5

contribution margin

Question 6

Fixed cost ÷contribution margin

Answer 6

break-even attendance point

Question 7

_____ is also a mechanism for monitoring and controlling revenue and spending

Answer 7

budgeting

Question 8

Comparing budget figure to actual figure

Difference between an budgeted amount

Answer 8

variance analysis

Question 9

What is the variance between them?
Favorable or unfavorable?
Investigation of these differences.

Answer 9

variance analysis

Question 10

zero-based budgeting

Answer 10

what is it

Question 11

Using a previous period’s budget
Baseline is automatically approved
Budget is stable, manager can operate it on a consistent basis
No incentive to reduce costs

Answer 11

incremental budgeting

Question 12

Rate of return = return on investment

Answer 12

capital budgeting

Question 13

Spending on buildings, facilities, and other tangible assets

Answer 13

capital budgets

Question 14

Spending on day to day operation

Answer 14

operational budget

Question 15

recurrent budget

Answer 15

operational budget

Question 16

investment budget

Answer 16

capital budget

Question 17

Principles in budgeting

Answer 17

Budgets should be accurate.
Budgets should be flexible
Expense items should be priced through more than one source.

Question 18

Budgets should be accurate.

Answer 18

Problematic if budgets are continuously over/ under performed.

Question 19

Budgets should be flexible

Answer 19

Flexibility should be built in that allows money to be moved around.
E.g.)Reserve fund

Question 20

Never rely on only one source to budget an expense item (Typically at least three potential providers).  cost control

Answer 20

Expense items should be priced through more than one source.