Ch 6: Budgeting & Standard Costs

About This Chapter

In this chapter you can learn about the approaches and considerations to budgeting and standard costs. Our engaging lessons are orchestrated by professional instructors who are available for your questions.

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

VideoObjective
Master Budget in Accounting: Definition, Components, and ExampleOutline the major components of a master budget and how a company's budgets connect to each other.
Different Parts of a Master BudgetAnalyze the aspects of a master budget.
Flexible BudgetingLearn about what it means for a company to employ flexible budgeting.
Standard CostsExplore the concept of standard costing and its advantages.
How Companies Set Standard CostsDiscover the considerations behind the setting of standard costs.
Variance Analysis Model in AccountingShow how direct materials, direct labor, and overhead variances factor into the variance analysis model.
Management by Exception: Definition and LimitationsLearn about management by exception and its advantages and disadvantages.

7 Lessons in Chapter 6: Budgeting & Standard Costs
Test your knowledge with a 30-question chapter practice test
Master Budget in Accounting: Definition, Components & Example

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.

Different Parts of the Master Budget

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.

Flexible Budgeting: Advantages & Explanation

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.

Standard Costs: Definition & Advantages

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.

How Companies Set Standard Costs

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.

Variance Analysis Model in Accounting

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.

Management By Exception: Definition and Limitations

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.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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