magnetic storage). Components of an audit trail include:(1) source records, (2) list of transactions processed, and(3) transaction identifiers so that reference can be madeto the source of a transaction. An audit trail allows thetracing of transactions to control totals and from thecontrol totals to supporting transactions. An audit trail isgood when the tracing process is easy to accomplish.
Variable cost that may be avoided if a particular course ofaction is not taken. Fixed costs are usually unavoidable inthe short run.
Activities performed each time a batch of goods isproduced; such activities vary with the number of batchesprepared.
Bill of materials
Listing of all the assemblies, subassemblies, parts, andraw materials that are needed to produce one unit of afinished product. Thus, each finished product has its ownbill of materials. The listing in the bill of materials file ishierarchical; it shows the quantity of each item needed tocomplete one unit of the next-highest level of assembly.
Department, facility, machine, or resource alreadyworking at its full capacity and which, therefore, cannothandle any additional demand placed on it. Also calledcritical resource, a bottleneck limits the throughput ofassociated resources.
Point in time (or in number of units sold) when forecastedrevenue exactly equals the estimated total costs; whereloss ends and profit begins to accumulate. This is thepoint at which a business, product, or project becomesfinancially viable.
Group, usually made up of top management and the chieffinancial officer, that reviews and approves, or makesappropriate adjustments to the budgets submitted fromoperational managers.
Period between one budget and the next.
Collection of procedures that describe how a budget is tobe prepared. Items usually appearing in a budget manualinclude a budget planning calendar and distributioninstructions for all budget schedules. Distributioninstructions are important because, once a schedule isprepared, other departments in the organization use theschedule to prepare their own budgets. Withoutdistribution instructions, someone who needs a particularschedule might be overlooked.
Schedule of activities for the development and adoptionof the budget. It should include a list of dates indicatingwhen specific information is to be provided to others by