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Definition of Budget
A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.
a financial plan for the future based on a single level
A plan expressed in monetary terms covering a future period of time and based on a defined
A set of interlinked plans that quantitatively describe a company’s projected
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
The multiplier associated with a change in government spending financed by an equal change in taxes.
The annual period over which budgets are prepared.
The amount by which government spending exceeds government revenues.
The excess of government spending over tax receipts.
a detailed set of documents that provides information
an intentional underestimation of revenues
the difference between total actual overhead
The process of ensuring that actual financial results are in line with targets – see variance
a planned expenditure
the process of formalizing plans and committing
A firm's set of planned capital expenditures.
management’s plan for investments in longterm
List of planned investment projects.
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
A 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
a process in which there is a rolling
a plan that aggregates monetary details
A method of budgetary control that flexes, i.e. adjusts the original budget by applying standard
a presentation of multiple budgets that
a budget developed by top management
A budget that takes the previous year as a base and adds (or deducts) a percentage to arrive at
the comprehensive set of all budgetary schedules
a budget expressed in both units and dollars
a 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.
A budget that allocates funds in line with strategies.
an approach to budgeting that relates
see continuous budgeting
A method of budgeting in which as each month passes, an additional budget month is added such that there is always a 12-month budget.
a comprehensive budgeting process
A method of budgeting that ignores historical budgetary allocations and identifies the costs that are necessary to implement agreed strategies.
A budgeting process using summary-level information to
a budgeted maximum allowable expenditure
Placing one or more limits on the amount of new investment undertaken by a firm, either
the receipt or disbursement of cash; when related
the budget variance of the two variance approach to analyzing overhead variances
Officer responsible for budgeting, accounting, and auditing.
Cost of capital
The required return for a capital budgeting project.
Cost of capital
The blended cost of a company’s currently outstanding debt instruments
Cost of Capital
The discount rate that should be used in the capital budgeting process.
See budget deficit.
Acceptance of a capital budgeting project contingent on the acceptance of another project.
Direct estimate method
A method of cash budgeting based on detailed estimates of cash receipts and cash
Direct materials mix variance
The variance between the budgeted and actual mixes of
The management of a firm's costs and expenses in order to control them in relation to
fixed overhead spending variance
the difference between the total actual fixed overhead and budgeted fixed overhead;
A revised budget estimate or update, part-way through a budget period.
The required return in capital budgeting.
Internal rate of return
The rate of return at which the present value of a series of future
Labor efficiency variance
The difference between the amount of time that was budgeted
margin of safety
the excess of the budgeted or actual sales
Materials price variance
The difference between the actual and budgeted cost to
Materials quantity variance
The difference between the actual and budgeted quantities
An inventory item’s budgeted maximum inventory level,
An inventory item’s budgeted minimum inventory level.
The debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt.
a formulation of the details of implementing
overhead efficiency variance
the difference between total budgeted overhead at actual hours and total budgeted
overhead spending variance
the difference between total actual overhead and total budgeted overhead at actual
A capital budgeting analysis method that calculates the amount of
A set of procedures for evaluating a capital budgeting decision after the fact.
predetermined overhead rate
an estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate
Production yield variance
The difference between the actual and budgeted proportions
A method of budgeting that takes into account seasonal fluctuations and estimates of when revenues will be earned and costs will be incurred over each month in the budget period.
The upper and lower levels of activity within which the business expects to be operating within the short-term planning horizon (the budget period).
a responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs
The value of a capital asset at end of a specified period. It is the current market price of an asset being considered for replacement in capital budgeting.
Selling price variance
The difference between the actual and budgeted selling price for
a model or budget against which actual results are
a budgeted or estimated cost to manufacture
A budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a
A method of cash budgeting that is organized along the lines of the statement of cash flows.
The budget deficit in excess of the deficit that in the long run keeps constant the ratio of the publically held national debt to GDP.
The trade deficit and the government budget deficit.
A cost that changes in amount in relation to changes in a related activity.
variable overhead efficiency variance
the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
variable overhead spending variance
the difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity
a difference between an actual and a standard or
A 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.
a fixed overhead variance that represents
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