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budget variance |
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Definition of budget variancebudget variancethe difference between total actual overhead
Related Terms:controllable variancethe budget variance of the two variance approach to analyzing overhead variances Activity-based budgetingA method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing. activity-based budgeting (ABB)planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and Balanced-Budget MultiplierThe multiplier associated with a change in government spending financed by an equal change in taxes. BudgetA detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget. BudgetA plan expressed in monetary terms covering a future period of time and based on a defined budgeta financial plan for the future based on a single level BudgetA set of interlinked plans that quantitatively describe a company’s projected Budget cycleThe annual period over which budgets are prepared. Budget deficitThe amount by which government spending exceeds government revenues. Budget DeficitThe excess of government spending over tax receipts. budget manuala detailed set of documents that provides information budget slackan intentional underestimation of revenues Budgetary controlThe process of ensuring that actual financial results are in line with targets – see variance budgeted costa planned expenditure budgetingthe process of formalizing plans and committing Capital budgetA firm's set of planned capital expenditures. capital budgetmanagement’s plan for investments in longterm capital budgetList of planned investment projects. Capital budgetingThe process of choosing the firm's long-term capital assets. capital budgetingRefers generally to analysis procedures for ranking Capital BudgetingThe process of ranking and selecting investment alternatives and capital budgetinga process of evaluating an entity’s proposed Capital budgetingThe series of steps one follows when justifying the decision to purchase capital budgeting decisionDecision as to which real assets the firm should acquire. Cash budgetA forecasted summary of a firm's expected cash inflows and cash outflows as well as its Consolidated Omnibus Budget Reconciliation Act (COBRA)A federal Act continuous budgetinga process in which there is a rolling CovarianceA statistical measure of the degree to which random variables move together. CovarianceA measure of the degree to which returns on two assets move in Direct materials mix varianceThe variance between the budgeted and actual mixes of financial budgeta plan that aggregates monetary details fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance Flexible budgetA method of budgetary control that flexes, i.e. adjusts the original budget by applying standard flexible budgeta presentation of multiple budgets that imposed budgeta budget developed by top management Incremental budgetA budget that takes the previous year as a base and adds (or deducts) a percentage to arrive at labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production Labor efficiency varianceThe difference between the amount of time that was budgeted labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; Labor rate varianceThe difference between the actual and standard direct labor rates labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); master budgetthe comprehensive set of all budgetary schedules material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. noncontrollable variancethe fixed overhead volume variance; operating budgeta budget expressed in both units and dollars overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual participatory budgeta budget that has been developed Planning, programming and budgeting system (PPBS)A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres. Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Priority-based budgetA budget that allocates funds in line with strategies. Production yield varianceThe difference between the actual and budgeted proportions program budgetingan approach to budgeting that relates rolling budgetsee continuous budgeting Rolling budgetsA method of budgeting in which as each month passes, an additional budget month is added such that there is always a 12-month budget. Selling price varianceThe difference between the actual and budgeted selling price for Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity VarianceA measure of dispersion of a set of data points around their mean value. The mathematical VarianceThe weighted average of the squared deviations from the variancea difference between an actual and a standard or VarianceThe dispersion of a variable. The square of the standard deviation. varianceAverage value of squared deviations from mean. A measure of volatility. Variance analysisA method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved. variance analysisthe process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences Variance minimization approach to trackingAn approach to bond indexing that uses historical data to Variance ruleSpecifies the permitted minimum or maximum quantity of securities that can be delivered to volume variancea fixed overhead variance that represents zero-base budgetinga comprehensive budgeting process Zero-based budgetingA method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies. Variable costA cost that changes in amount in relation to changes in a related activity.
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