Term
|
Definition
| Formal statement of a company's future plans. In monetary terms. |
|
|
Term
| Capital Expenditures Budget |
|
Definition
| lists dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities |
|
|
Term
|
Definition
| shows expected cash inflows and outflows during the budget period. Prepared after sales, merchandise purchases, expenses and capital expenditures budgets. |
|
|
Term
|
Definition
| formal, comprehensive plan for a company's future. Contains several individual budgets that are linked with eachother to form a coordinate plan. |
|
|
Term
|
Definition
| applied by preparing rolling budgets. |
|
|
Term
|
Definition
| Revising entire set of budgets for remaining months and quarters to replace onces that lapsed. |
|
|
Term
|
Definition
| Variable OH spending variance + Fixed OH spending variance + variable OH efficiency variance |
|
|
Term
|
Definition
| (aka variance) Actual - standard costs. Can be favorable or unfavorable. |
|
|
Term
|
Definition
| occurs when standard direct labor hours expected for actual production differ from the actual direct labor hours used. |
|
|
Term
|
Definition
| when compared to budget, the actual cost or revenue contributes to a higher income. |
|
|
Term
|
Definition
| (static budget) based on a single predicted amount of sales or other measure of activity. |
|
|
Term
|
Definition
| (variable budget) a report based on predicted amounts of revenues and expenses corresponding to the actual level of output. |
|
|
Term
|
Definition
| managers focus attention on the most significant variance and give less attention to areas where performance is reasonably close to standard. |
|
|
Term
|
Definition
| Difference between ACTUAL PRICE per unit of input and budgeted price per unit of input. |
|
|
Term
|
Definition
| difference between actual quantity of input used and budgeted quantity of input |
|
|
Term
|
Definition
| occurs when management pays an amount different than the standard price to acquire an item. |
|
|
Term
|
Definition
| preset costs for delivering a product or service under normal conditions. |
|
|
Term
|
Definition
| when compared to budget, actual cost or revenue contributes at a lower income. |
|
|
Term
|
Definition
| explaining the difference (or variance) between actual costs and the standard costs allowed for the good output |
|
|
Term
|
Definition
| occurs when a difference occurs between the actual volume of production and the standard volume of production. |
|
|
Term
| Accounting Rate of Return |
|
Definition
| (return on average investment) computed by dividing a project's after-tax net income by the average amount invested in it. |
|
|
Term
|
Definition
| (escapable expenses) amounts the company would not incur if it eliminated the segment. |
|
|
Term
|
Definition
| process of analyzing alternative long term investments and deciding which assets to acquire or sell. |
|
|
Term
|
Definition
| minimum acceptable rate of return and is applied as follows. Used when using IRR |
|
|
Term
|
Definition
| (differential costs) additional costs incurred if a company pursues a certain course of action. |
|
|
Term
|
Definition
| (IRR) which equals the rate that yields an NPV of zero for an investment. |
|
|
Term
|
Definition
| (NPV) is computed by discounting the future net cash flows from the investment at hte project's required rate of return and then subtracting the initial amount invested. |
|
|
Term
|
Definition
| (PBP) expected time period to recover the initial investment amount |
|
|
Term
|
Definition
| (inescapable expenses) are amounts that would continue even if the segment is eliminated. |
|
|
