Open in App
Log In Start studying!

Select your language

Suggested languages for you:

Problem 1

What are the four elements of the budgeting cycle?

Short Answer

Expert verified
The four elements of the budgeting cycle are: 1) the planning and preparation phase, where financial objectives and plans are established; 2) the approval and adoption phase, where the prepared budget is endorsed by relevant authorities; 3) the implementation phase, involving budget execution and monitoring; and 4) the evaluation and control phase, comparing actual performance to budgeted performance and making necessary adjustments.
See the step by step solution

Step by step solution

Unlock all solutions

Get unlimited access to millions of textbook solutions with Vaia Premium

Over 22 million students worldwide already upgrade their learning with Vaia!

Step 1: 1: Identify the first element of the budgeting cycle

The first element of the budgeting cycle is the planning and preparation phase, which involves setting financial objectives, determining resource allocation, and creating a financial plan for the organization.

Step 2: 2: Identify the second element of the budgeting cycle

The second element of the budgeting cycle is the approval and adoption phase, in which the prepared budget is presented to the relevant authorities or decision-makers for review and endorsement.

Step 3: 3: Identify the third element of the budgeting cycle

The third element of the budgeting cycle is the implementation phase. This involves putting the approved budget into action by distributing funds to various departments, monitoring expenses, and ensuring that financial activities align with the organization's objectives.

Step 4: 4: Identify the fourth element of the budgeting cycle

The fourth and final element of the budgeting cycle is the evaluation and control phase. In this stage, actual financial performance is compared with the budgeted performance to identify any discrepancies, and adjustments are made as needed to ensure the organization stays on track with its financial objectives.

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Access millions of textbook solutions in one place

  • Access over 3 million high quality textbook solutions
  • Access our popular flashcard, quiz, mock-exam and notes features
  • Access our smart AI features to upgrade your learning
Get Vaia Premium now
Access millions of textbook solutions in one place

Most popular questions from this chapter

Chapter 6

Budgeting; direct material usage, manufacturing cost, and gross margin. Xander Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of \( 2\) per skein and 0.8 gallons of dye at a cost of \(6\) per gallon. All other materials are indirect. At the beginning of the year Xander has an inventory of 458,000 skeins of wool at a cost of \(961,800\) and 4,000 gallons of dye at a cost of \(23,680 .\) Target ending inventory of wool and dye is zero. Xander uses the FIF0 inventory cost-flow method. Xander blue rugs are very popular and demand is high, but because of capacity constraints the firm will produce only 200,000 blue rugs per year. The budgeted selling price is \(2,000\) each. There are no rugs in beginning inventory. Target ending inventory of rugs is also zero. Xander makes rugs by hand, but uses a machine to dye the wool. Thus, overhead costs are accumulated in two cost pools- one for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH). There is no direct manufacturing labor cost for dyeing. Xander budgets 62 direct manufacturing laborhours to weave a rug at a budgeted rate of \(13\) per hour. It budgets 0.2 machine-hours to dye each skein in the dyeing process. 1\. Prepare a direct materials usage budget in both units and dollars. 2\. Calculate the budgeted overhead allocation rates for weaving and dyeing. 3\. Calculate the budgeted unit cost of a blue rug for the year. 4\. Prepare a revenues budget for blue rugs for the year, assuming Xander sells (a) 200,000 or (b) 185,000 blue rugs (that is, at two different sales levels). 5\. Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. 6\. Find the budgeted gross margin for blue rugs under each sales assumption. 7\. What actions might you take as a manager to improve profitability if sales drop to 185,000 blue rugs? 8\. How might top management at Xander use the budget developed in requirements \(1-6\) to better manage the company?

Chapter 6

How can sensitivity analysis be used to increase the benefits of budgeting?

Chapter 6

Comprehensive problem with \(A B C\) costing. Animal Gear Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: Animal Gear uses a FIF0 cost-flow assumption for finished-goods inventory. Animal Gear uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $ 105\( per setup-hour, \) 10\( per machine-hour, and \) 15$ per inspection-hour, respectively. Other information follows: If necessary, round up to calculate number of batches. Nonmanufacturing fixed costs for March equal \( 32,000\), half of which are salaries. Salaries are expected to increase \(5 \%\) in April. 0 ther nonmanufacturing fixed costs will remain the same. The only variable nonmanufacturing cost is sales commission, equal to \(1 \%\) of sales revenue. Prepare the following for April: 1\. Revenues budget 2\. Production budget in units 3\. Direct material usage budget and direct material purchases budget 4\. Direct manufacturing labor cost budget 5\. Manufacturing overhead cost budgets for each of the three activities 6\. Budgeted unit cost of ending finished-goods inventory and ending inventaries budget 7\. cost of goods sold budget 8\. Nonmanufacturing costs budget 9\. Budgeted income statement (ignore income taxes) 10\. How does preparing the budget help Animal Gear's management team better manage the company?

Chapter 6

Kaizen budgeting for carbon emissions. Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter for 500,000 metric tons in 2018 ). Apex management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 475,000 metric tons so that the company can meet Environmental Protection Agency guidelines by \(2019 .\) costs and benefits are as follows: Apex Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. 1\. If Apex reduces emissions by \(1 \%\) each quarter, beginning with the second quarter of \(2018,\) will the company reach its goal of 475,000 metric tons by the end of \(2019 ?\) 2\. What would be the net financial cost or benefit of their plan? Ignore the time value of money. 3\. What factors other than cost might weigh into Apex's decision to carry out this plan?

Chapter 6

Define rolling budget. Give an example.

Join over 22 million students in learning with our Vaia App

The first learning app that truly has everything you need to ace your exams in one place.

  • Flashcards & Quizzes
  • AI Study Assistant
  • Smart Note-Taking
  • Mock-Exams
  • Study Planner
Join over 22 million students in learning with our Vaia App Join over 22 million students in learning with our Vaia App

Recommended explanations on Math Textbooks