Chapter 3 - Budgetary Control Systems Flashcards Preview

AAT Level 4 - Budgeting > Chapter 3 - Budgetary Control Systems > Flashcards

Flashcards in Chapter 3 - Budgetary Control Systems Deck (10)
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1
Q

What is a plan and what is a budget?

A

A plan sets out an organisation’s strategies to achieve identified goals. Plans are long term.

A budget is a formalised plan for future activities of an organisation. Budgets are short term.

2
Q

What is the purpose of budgeting?

A

A budget is a tool which allows managers to plan their operations and then control those operations by comparing actual results against budgeted results.

3
Q

List five benefits of budgeting.

A
  1. Planning
  2. Communication and co-ordination
  3. Authorisation
  4. Monitoring and control
  5. Motivation
4
Q

What are the seven stages of the planning and control cycle?

A
  1. Identify organisational objectives
  2. Identify alternative strategies which will help achieve organisational objectives
  3. Evaluate each alternative strategy
  4. Choose which courses of action to follow
  5. Implement the long-term plan by preparing budgets
  6. Measure actual results and compare with the budget
  7. Respond to divergences from budget
5
Q

What are capital budgets?

A

These budgets plan for the acquisition of capital items such as buildings, vehicles or machinery.

6
Q

What are revenue budgets?

A

These budgets plan for the amount of income generated from sales of products and services. These tend to be short term.

7
Q

What are resource budgets?

A

These budgets are short term and are concerned with the day-to-day operations of the business. There are different types of resource budgets:

  • production budget
  • materials usage budget
  • materials purchases budget
  • labour usage budget
  • labour cost budget
  • machine hours budget
  • variable overheads budget
  • fixed overheads budget
8
Q

What is key budget factor?

A

This is the element or resource of the organisation that is likely to limit the activities of the organisation.

9
Q

List the five stages of the product life cycle.

A
  1. Development
  2. Launch
  3. Growth
  4. Maturity
  5. Decline
10
Q

What is PEST?

A

PEST analysis looks at the four different factors that could affect demand for the product.

Political
Economic
Social
Technological