Get premium membership and access questions with answers, video lessons as well as revision papers.
(a) Where the business uses a system of standard costing, there should be an organisation/responsibilities for reviewing the standards annually.
(b) There should be a budget committee, possibly chaired by the chief executive, with members (senior managers) representing every department or operation in the organisation. This committee should have the authority to make decisions about the budget and give instructions accordingly to departmental management.
(c) There should be a budget officer, possibly management accountant, to act as secretary the budget committee, issue committee meeting minutes, chase up late departmental budget bring together the master budget into a P & L statement and budgeted balance sheet and so on.
(d) The departmental/operational budgets required to produce the master budget must be clearly defined and stated in sequence of preparation – for example sales budget finished goods stock budget, production budget, machine utilisation budget, direct labour budget, materials usage budget, overhead cost centre budgets, cash budget and so on budgeted costs and revenues are built up o the basis of cost centres. There must be a structure of such centres, and mangers responsible for the budget of each individual centre.
(e) In large organizations with subsidiary companies, the budget organisation for the group must provide for budgeting at subsidiary level, followed by budgeting at group level.
(f) For control purposes, the budget period should be divided up into control periods, and the budgeted revenues, costs and cash flows also divided accordingly. Budget cost allowances can thus be produced. A budget cost allowance is the cost, which a budget centre is expected to incur in a control period.
(g) A system should exist for reviewing the fixed assets expenditure budget within the framework of the preparation the annual master budget.
Titany answered the question on October 12, 2021 at 08:31
- Describe the Contingency theory of budgetary control(Solved)
Describe the Contingency theory of budgetary control
Date posted: October 12, 2021. Answers (1)
- Describe the two Budgetary Styles(Solved)
Describe the two Budgetary Styles
Date posted: October 12, 2021. Answers (1)
- How does human behaviour affect budgetary control?(Solved)
How does human behaviour affect budgetary control?
Date posted: October 12, 2021. Answers (1)
- Uses of budgetary control(Solved)
Uses of budgetary control
Date posted: October 12, 2021. Answers (1)
- Discuss two types of control system in management accounting(Solved)
Discuss two types of control system in management accounting
Date posted: October 12, 2021. Answers (1)
- Classification of Overheads(Solved)
Classification of Overheads
Date posted: October 12, 2021. Answers (1)
- Aims of Absorption costing(Solved)
Aims of Absorption costing
Date posted: October 12, 2021. Answers (1)
- Discuss Overhead Absorption and its illustration(Solved)
Discuss Overhead Absorption and its illustration
Date posted: October 12, 2021. Answers (1)
- Describe Traditional Absorption Costing(Solved)
Describe Traditional Absorption Costing
Date posted: October 12, 2021. Answers (1)
- Describe Joint Product Decisions while giving illustrations(Solved)
Describe Joint Product Decisions while giving illustrations
Date posted: October 12, 2021. Answers (1)
- Describe Extra Shift Decisions while giving illustrations(Solved)
Describe Extra Shift Decisions while giving illustrations
Date posted: October 12, 2021. Answers (1)
- Describe Shut down Problems while giving illustrations(Solved)
Describe Shut down Problems while giving illustrations
Date posted: October 12, 2021. Answers (1)
- Describe Make or buy decisions – with limiting factors and give illustrations
(Solved)
Describe Make or buy decisions – with limiting factors and give illustrations
Date posted: October 12, 2021. Answers (1)
- Describe Make or buy decisions – No limiting factors and give illustrations
(Solved)
Describe Make or buy decisions – No limiting factors and give illustrations
Date posted: October 12, 2021. Answers (1)
- Features of relevant costs for non routine decisions(Solved)
Features of relevant costs for non routine decisions
Date posted: October 12, 2021. Answers (1)
- Distinguish various type of costs and classify them appropriately(Solved)
Distinguish various type of costs and classify them appropriately
Date posted: October 12, 2021. Answers (1)
- Differentiate between perfect and imperfect information giving illustration of each in management accounting(Solved)
Differentiate between perfect and imperfect information giving illustration of each in management accounting
Date posted: October 12, 2021. Answers (1)
- Illustrate Multi-stage decision making(Solved)
Illustrate Multi-stage decision making
Date posted: October 12, 2021. Answers (1)
- Illustrate three measures of risk(Solved)
Illustrate three measures of risk
Date posted: October 8, 2021. Answers (1)
- ABC Ltd. is trying to set up the selling prices of its product and the prices under consideration are Shs. 4.00,. Shs. 4.30 and Shs....(Solved)
ABC Ltd. is trying to set up the selling prices of its product and the prices under consideration are Shs. 4.00,. Shs. 4.30 and Shs. 4.40.
The demand is uncertain but this estimate has been made as follows; NB: state of nature cannot be changed, Conditions can be changed.
Required:
Advice the management on the best price to set.
Date posted: October 8, 2021. Answers (1)