About This Chapter
Budgeting and Standard Costs - Chapter Summary and Learning Objectives
Budgeting is a crucial aspect of effective company practice, and with this chapter, you'll be able to break down its components in a simple-to-follow manner. You'll learn about different budgeting strategies as well as models that help companies make budgeting decisions.
After each lesson, you'll be able to test your comprehension through a practice quiz that you can take and re-take as many times as you want. In the process of going through these lessons, you'll acquire knowledge regarding:
- The master budget and its various parts
- Flexible budgeting
- Standard costs and how companies set them
- The variance analysis model
- Management by exception
|Master Budget in Accounting: Definition, Components, and Example||Outline the major components of a master budget and how a company's budgets connect to each other.|
|Different Parts of a Master Budget||Analyze the aspects of a master budget.|
|Flexible Budgeting||Learn about what it means for a company to employ flexible budgeting.|
|Standard Costs||Explore the concept of standard costing and its advantages.|
|How Companies Set Standard Costs||Discover the considerations behind the setting of standard costs.|
|Variance Analysis Model in Accounting||Show how direct materials, direct labor, and overhead variances factor into the variance analysis model.|
|Management by Exception: Definition and Limitations||Learn about management by exception and its advantages and disadvantages.|
1. Master Budget in Accounting: Definition, Components & Example
In this lesson, we'll outline the major components of a master budget and look at an example that shows how a company's individual budgets relate to each other and can be used to form a strategic plan for a company.
2. Different Parts of the Master Budget
One of the most important documents that a company produces is the master budget. And, as you might expect, it is as thorough as it is important. In this lesson, we look at the parts and function of a master budget.
3. Flexible Budgeting: Advantages & Explanation
What is flexible budgeting? Well, it certainly has nothing to do with being able to touch your toes! It's a way of budgeting that gives better feedback on company performance when sales or production volume is different than what was originally anticipated.
4. Standard Costs: Definition & Advantages
In this lesson, we'll explore the concept of standard costing and some of the advantages that this accounting method affords companies that implement it. When you are through, test your understanding with a quick quiz.
5. How Companies Set Standard Costs
Managing a company's expenses means managing a lot of changing amounts. Sometimes it's easier to just have a standard cost. But what is a standard cost? This lesson explains the importance of them.
6. Variance Analysis Model in Accounting
Budgets and variances are useful, but if you really want to see just how effective your organization is at making use of that information, then you're going to want to learn about variance analysis modeling.
7. Management By Exception: Definition and Limitations
Sometimes things go as planned, and sometimes they don't. In this lesson, you'll learn about management by exception, including how it works and its advantages and disadvantages. You'll also have an opportunity to take a short quiz.
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Other chapters within the Accounting 102: Intro to Managerial Accounting course
- Overview of Managerial Accounting
- Cost Types
- Cost Behavior Analysis & Cost-Volume Profit
- Job-Order Costing & Process Costing
- Basics of Activity-Based Costing
- Reporting Systems & Structures in Accounting
- Short & Long-Term Decision-Making in Accounting
- Basics of Financial Statement Analysis
- Studying for Accounting 102