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Flashcards in chapter 10- budget control Deck (11)
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1

static budget

a projection on budget data at one level of activity

2

budgetary control includes

1.Developing budgets.
2.Analyzing the differences between actual and budgeted results.
3.Taking corrective action.
4.Modifying future plans, if necessary.

3

flexible budgets

series of static budgets at different activity levels
- production data
-cost data

4

developing flexible budget steps

1.Identify the activity index and the relevant range of activity.
2.Identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost.
3.Identify the fixed costs, and determine the budgeted amount for each cost.
4.Prepare the budget for selected increments of activity within the relevant range.

5

management by exeption

means that top management's reviews of a budget report is focused primarily on differences between actual results and planned objectives

6

materiality

without quantitive guidelines management would have to investigate every budgets difference regardless of the amount

7

ROI return on investment

shows the effectives of the manager in using assets in their disposal

8

ROI formula

controllable margin / average operating assets

9

ROI judgemental factors

valuation of operating assets
Margin (income) measure

10

valuation of operating assets

Operating assets may be valued at acquisition cost, book value, appraised value, or market value.

11

Margin (income) measure

This measure may be controllable margin, income from operations, or net income.