(UGB253) - Management Accounting for Business: Key Concepts and Strategies

UGB253
Management
Accounting for
Business
1

Table of Contents
Q1..........................................................................................................................................................2
1).......................................................................................................................................................2
Purpose of flexible Budgets..........................................................................................................2
Preparation of Flexible Budgets....................................................................................................2
2).......................................................................................................................................................3
Strengths and weaknesses of the flexible budgeting process........................................................3
Strengths of Flexible Budgeting....................................................................................................3
Weaknesses of Flexible Budgeting...............................................................................................3
3).......................................................................................................................................................4
Behavioral Aspects of Budgeting..................................................................................................4
Motivation.....................................................................................................................................4
Participation..................................................................................................................................4
Feedback.......................................................................................................................................4
Group effects.................................................................................................................................4
Budget slack..................................................................................................................................5
Q2..........................................................................................................................................................5
1).......................................................................................................................................................5
2).......................................................................................................................................................5
3).......................................................................................................................................................6
What are Qualitative Factors?.......................................................................................................6
4).......................................................................................................................................................6
Relevant cost.................................................................................................................................6
Reference...............................................................................................................................................8
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Task 1
3

Q1.
1)
Budgetary control is another term for the practice of using budgets to keep track of and oversee the
operations of a company. In order to ensure that goals are reached, budgets are created. It is feasible
to make meaningful comparisons between actual and expected outcomes by using the information
included in budget reports.
During the course of a fixed budgetary management system, a single prediction of sales volume or
any other activity level serves as the basis for the master budget. The budgeted amount for each cost
is calculated based on the number of sales that are expected to occur. In accounting jargon, a "fixed
budget" is a budget that is predicated on a certain quantity of sales or other operations being
completed. An important advantage of budgets is that they can be used to compare actual results to
expectations, which is a substantial benefit. A performance report contains information that may be
studied and compared with other data. Approximately 10,000 (composite) units were planned to be
sold in January of this year, based on Optel's fixed budget for the year 2009. Eyeglasses, frames,
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