See rolling budget.
See rolling budget.
A rolling budget adds a future accounting period’s budget to replace a budget for an accounting period that has past. For example, a company’s 2024 annual budget will become a rolling budget if in February...
What is a rolling budget? Author: Harold Averkamp, CPA, MBA Definition of Rolling Budget A rolling budget often refers to a company’s operating budget which presents the future monthly budgets for the next 12 months. A...
A detailed plan with dollar amounts. Examples of budgets used in business include the cash budget, sales budget, production budget, department budgets, the master budget, and the capital expenditures budget. Some budgets...
The operating activities of a company, excluding the major segments of the company that are being discontinued.
A budget that continuously shows the amounts for a full year into the future. As a month or quarter actually occurs, it is removed from the budget and is replaced by the budgeted amounts for a month or quarter in the...
What is a flexible budget? Author: Harold Averkamp, CPA, MBA Definition of a Flexible Budget A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more...
What is a budget? Author: Harold Averkamp, CPA, MBA A budget is a financial plan for future activities. The budgets used in business often include a sales or revenues budget detailed by products or services, production...
A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company...
A budget that does not flex for changes in volume or activity.
The difference between the actual amount and the budgeted amount.
What is a fixed budget? Author: Harold Averkamp, CPA, MBA Definition of Fixed Budget A fixed budget is a budget that does not change or flex for increases or decreases in volume. (“Volume” could be sales, units...
What is a static budget? Author: Harold Averkamp, CPA, MBA Definition of Static Budget A static budget is a budget in which the amounts will not change even with significant changes in volume. In contrast to a static...
What is a budget variance? Author: Harold Averkamp, CPA, MBA A budget variance results when an actual amount is different from a planned or budgeted amount. A budget variance can occur for revenues and for expenses. Join...
Also referred to as the fixed overhead spending variance. The difference between the actual fixed overhead incurred and the amount of fixed overhead that had been budgeted.
What is a flexible budget variance? Author: Harold Averkamp, CPA, MBA Definition of Flexible Budget and Flexible Budget Variance First, a flexible budget is a budget in which some amounts will increase or decrease when...
What are the benefits of a revenue budget? Author: Harold Averkamp, CPA, MBA The main benefit of a revenue budget is that it requires looking into the future. The revenue budget should contain the assumptions made about...
What is the meaning of a favorable budget variance? Author: Harold Averkamp, CPA, MBA Definition of a Favorable Budget Variance A favorable budget variance means that the actual amount that occurred was better for the...
What is the difference between a budget and a standard? Author: Harold Averkamp, CPA, MBA Definition of a Budget In business and other organizations, a budget often refers to a department’s or a company’s projected...
An expectation that as a task is repeated there will be significant time reductions during the early repetitions. The time savings will dissipate after continuous performance. This is important to consider when setting...
Budgetary slack means providing a cushion in a budget in order to avoid an unfavorable variance at the end of the budget year. The budgetary slack might be achieved by entering budget expense amounts that are larger than...
A variance arising in a standard costing system that indicates the difference between the actual amount of fixed manufacturing overhead incurred and the budgeted amount of fixed manufacturing overhead. To learn more, see...
What is zero-based budgeting? Author: Harold Averkamp, CPA, MBA Definition of Zero-Based Budgeting Zero-based budgeting, or ZBB, is a rigorous budgeting process that requires that every dollar of every expense in the...
Standard Costing Author: Harold Averkamp, CPA, MBA 48 Q&A Popular Recent What is a flexible budget? What is absorption costing? What is job order costing? What is cost accounting What is the difference between actual...
What causes an unfavorable fixed overhead budget variance? Author: Harold Averkamp, CPA, MBA An unfavorable fixed overhead budget variance results when the actual amount spent on fixed manufacturing overhead costs...
Rather than the previous year’s budget being the starting point for the next budget, a zero-based budget assumes no activities: everything in the budget must be justified.
are sufficiently different from each other and each has a significant cost. (When a company’s output consists of continuous flows of identical, low-cost units, the process costing system is more appropriate.) Since...
of comprehensive income into one continuous financial statement.) The amount of net income will cause an increase in the stockholders’ equity account Retained Earnings, while a loss will cause a decrease. The amount...
What is a controller's cushion? Author: Harold Averkamp, CPA, MBA A controller’s cushion or controller’s reserve involves temporarily recording too much expense for an item that the controller calculates. For...
, the budgeting for operations will include preparing the following projections for the next accounting year: Amounts for sales Amounts for producing goods Amounts for each department’s expenses Summarizing the above...
margin ratio? What is the advantage of issuing bonds instead of stock? What is the high-low method? What is a static budget? In accounting, what is meant by relevant costs? What is trading on equity? What is a fixed...
A balance sheet which is a projection of the amounts at a future date. It should be based on the projected, budgeted transactions.
An estimated income statement for a future period of time that is based on projected or budgeted transactions.
The estimated volume in a future period that will be used for allocating indirect manufacturing costs.
What is capital budgeting? Author: Harold Averkamp, CPA, MBA Definition of Capital Budgeting Capital budgeting is a process used by companies for evaluating and ranking potential capital expenditures or investments that...
The formal planning for significant expenditures, such as property, plant and equipment.
What is the accounting treatment for an asset that is fully depreciated, but continues to be used in a business? Author: Harold Averkamp, CPA, MBA An asset that is fully depreciated and continues to be used in the...
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