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cma course p1 : unit13

cma course part 1 :  lectures and some questions about each unit



MR:amr taison
MR:mohamed cma
MR:desoky kh.
(13.1) Roles of Budgets and the Budgeting Process
1) The Budget as a Tool (planning , control , motivational)
2) The Budget as a Formal Quantification of Management’s Plans
3) Budgeting’s Role in the Overall Planning and Evaluation Process
4) Participation in the Budget Process
5) Top-down (authoritative) budgeting
6) Bottom-up (participative) budgeting
7) Time Frames for Budgets
8) Budgeting’s Role in Formulating and Controlling Short-Term Objectives
9) Budgeting’s Role in Measuring Performance against Established Goals
10) Budgeting’s Role in Monitoring and Controlling Expenditures
11) Role of Budgeting Process in Facilitating Communication among Organizational Units and Enhancing Coordination of Organizational Activities
12) Characteristics of a Successful Budgeting Process
13) Effects of External Factors on the Budgeting Process
14) The Concept of Controllability
15) Criticisms and Limitations of the Budgeting Process
MR:amr taison
MR:mohamed cma
MR:desoky kh.
MR:m.batayneh
(13.2) budgeting and standard costs
1) The Use of Cost Standards
2) Developing Standards
3) Ideal vs. Practical Standards
MR:amr taison
MR:mohamed cma
MR:desoky kh.
MR:m.batayneh
(13.3) The Master Budget
1) Master Budget Process -- Graphical Depiction
2) Master Budget
3) Operating Budget
4) Financial Budget
5) Sales Budget
6) Production Budgets
7) Purchases Budget
8) Expense Budgets
9) Capital Budget
10) Cash Budget
MR:amr taison
MR:mohamed cma
MR:desoky kh.
MR:m.batayneh
(13.4) Budget Methodologies
1) Project Budget
2) Activity-Based Budgeting
3) Zero-Based Budgeting
4) Continuous (Rolling) Budgeting
G.2020G.2021mr.amro taison
10.113.1lec. 20
10.213.2lec. 20
10.313.3lec. 21
10.413.4lec. 21
Some Questions about unit 13
1- How is budget used as a tool? (Budget tools)
The budget is a planning tool
The budget is a control tool.
The budget is a motivational tool.
The budget is a means of communication.
The budget is a goal congruence tool.
2- How is the budget as a measure of management plans?
The company sets goals that it works to achieve when preparing the budget. These goals are related to its market share, profitability, the company’s growth rate, and other goals. The company cannot achieve these goals without adequately planning for each goal, and representing the amount of resources that will be used, also predicting the expected results of using those resources. Therefore, the preparation of the budget depends on the internal resources of the company
3- What is the role of the budget in overall planning?
Planning is the process by which an organization sets specific goals for it and works to achieve these goals. The planning process includes the following:
1) Define the company's mission
2) Develop a strategic plan
3) Define the priorities
4) Setting short-term goals
4- What are the methods of preparing the budget?
* Top-down (authoritative) budgeting
* Bottom-up (participative) budgeting
5- What are the time frames for budgets?
* Strategic budgets: cover a period of 10 years or more.
* Intermediate budgets: cover a period of up to 2 years.
* Operational budgets: cover a period from one month to one year.
6- What are the standard costs in preparing budgets?
It is a predetermined forecast of production cost (inputs and outputs) or the cost of production activity
7- What are the methods for determining standard costs?
1) Activity analysis
2) Historical data
8- What are the Ideal (theoretical) standards?
The standard costs specified for production under optimal conditions. Also called (perfection standards, maximum efficiency standards)
9- What are the Practical (currently attainable) standards?
The expected performance that should be achieved by skilled staff with an allowance for normal spoilage, waste and downtime.
10- What does the master budget include?
This budget includes the company's operational and financial plans for a specific period, which is normally one year or one operating cycle
11- What does the operating budget include?
1) Sales budget
2) Production budget
3) Direct materials budget
4) Direct labor budget
5) Employee fringe benefits budget
6) Manufacturing overhead budget
7) Ending finished goods inventory budget
8) Cost of goods sold budget
9) Non-manufacturing budget
10) Pro forma income statement
12- What does the non-manufacturing budget include?
1) Research and development budget
2) Design budget
3) Marketing budget
4) Distribution budget
5) Customer service budget
6) Administrative budget
13- What does the financial budget include?
1) Capital budget
2) Projected cash disbursement schedule
3) Projected cash collection schedule
4) Cash budget
5) Pro forma balance sheet
6) Pro forma statement of cash flows
14- What is the importance of sales budget?
The sales budget is the first budget that should be prepared because the sales volume is the basis on which production and purchases of materials are determined, as well as operating expenses, and cash flows, and therefore forecasting the amount of sales leads the company to prepare other budgets
15- What is the production budget?
The production budget is directly following the sales budget, which is more concerned with industrial companies than commercial companies.
It is called the production budget in industrial companies, and the purchase budget in commercial companies.
The production (or purchases) budget depends on the quantity, not the value (cash), that is, its focus on the number of units that the company intends to sell and the beginning & ending inventory
16- What is the project budget?
When the company intends to establish a specific project internally, such as making a new production line, a new building, or opening a new branch, in such cases, a project budget is prepared.
17- What is (traditional system) of activities based budgeting?
The budget is prepared with the same principles as in the distribution of activities based costing (which studied in the costing section).
The traditional system of budgeting is : collecting all the indirect costs in one cost pool and they are distributed to the products depending on one cost driver such as the level of production or working hours of the machines
18- What is activity-based budgeting?
Activity-based budgeting identifies the activities that cause costs, then a cost pool is identified for each activity, and a cost driver is identified for each cost pool
19- What is Zero-Based Budgeting?
It is a budget and planning process in which (every budget cycle) each manager must justify the entire budget of his department
20- What continuous budgeting?
Continuous budgeting is one of the methods used in preparing budgets, this method depends on that the budget prepared by the company (or department manager) periodically covers a certain period in the future.
For example, the budget period is divided into 12 months from January to December, after it ends and the actual results are available for this month. The manager makes adjustments in the budget by adding a new month to it, so that the budget becomes for the period from the current February to the next January, thus the budget period becomes 12 months as it is, the same adjustment is made after the end of each month and on an ongoing basis
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