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Wiley CMAexcel Learning System, Part 1: Financial Reporting, Planning, Performance, and Control.
Copyright © 2014, Institute of Management Accountants. Published by John Wiley & Sons, Inc.
Session 2 Recap
• Section A , Topic 2: Recognition, Measurement,
Valuation, and Disclosure
Answer: b.
Examine
variations.
• Budgeting facilitates
movement toward goals.
Long-Term
Long-TermPlans Short-Term
and
Plans
Budgets Short-TermPlans
Plans
and Budgets and
andBudgets
Budgets
Answer: b.
Top management ultimately is responsible for its budgets, and its primary
means of exercising this responsibility is to ensure that all levels of
management understand and support the budget and the overall budget
control process. Budgets play a role in measuring performance against
established goals.
Based on ICMA Part 1, Section B, Topic 2: Budgeting Concepts 13
question, used Wiley CMAexcel Learning System, Part 1: Financial Reporting, Planning, Performance, and Control.
with permission Copyright © 2014, Institute of Management Accountants. Published by John Wiley & Sons, Inc.
Budget Issues
• Responsibility center or SBU (strategic business unit— segment
for which a manager is given authority)
Costs
Revenue
Investment decisions
• Budget slack
Extra money in budget to accommodate unexpected
Budgeting to fail
Cumulative for sublevels leads to inaccurate master budget
b. Negotiation
a. Proposal
Answer: b.
or or
• All involved parties (participative) • Reasonably attainable standards
Short-run objective:
Hire sales people on West Coast
Operations:
Hire, train, and evaluate sales
results
Answer: I = b, II = a, III = b
Sales Budget
Based on ICMA Part 1, Section B, Topic 5: Annual Profit Plan and Supporting Schedules 28
question, used Wiley CMAexcel Learning System, Part 1: Financial Reporting, Planning, Performance, and Control.
with permission Copyright © 2014, Institute of Management Accountants. Published by John Wiley & Sons, Inc.
Direct Materials Usage Budget
• Specifies AA Models Direct Materials Usage Budget
material Production requirement 160,000 (c)
components Budgeted production (units)
Pounds of clay per unit of product ×3
• Specifies cost of
Total pounds of clay required 480,000 (d)
components Cost per pound × $14 (e)
Cost of clay to be used in production $6,720,000 (f)