Availability Session 1 Duration One session. School School of Accounting and Finance. Enrolment Restrictions Postgraduate students only. Learning Outcomes Upon successful completion of this subject, students should: be able to discuss and critique the historical and ethical development of management accounting; be able to apply cognitive skills in the design and operation of costing systems; be able to critically evaluate the design and operation of performance management systems; be able to explain the role of management accounting in organisational contexts and the implications for management accounting of different paradigms; be able to apply analytical and synthetical skills in report writing, and use quantitative techniques and computer software including using the Internet as a professional source; be able to create and implement computerised decision models; and be able to critique how managers make decisions.
Following budgets are prepared in functional budgets:. This budget is very useful for the top management of the company because it covers all the information in a summarized manner. It is a rigid budget and is drawn on the assumption that there will be no change in the budget level.
Zero base budgeting is not based on the incremental approach; previous year figures are not adopted as base. Following ratios are used to evaluate the deviations of the actual performance from the budgeted performance. Flexible budget provides logical comparison. The actual cost at the actual activity is compared with the budgeted cost at the time of preparing a flexible budget.
Performance and cost management, analysis and control
Flexibility recognizes the concept of variability. Flexible budget helps in assessing the performance of departments in relation to the activity level achieved. Cost ascertainment is possible at different levels of activities. It is also useful in fixation of price and preparation of quotations.
Cost Control and Cost Reduction: Definition and Differences
With the help of the following given expenses, prepare a budget for production of 10, units. Prepare flexible budgets for 5, and 8, units. Cash budget comes under the category of financial budget. It is prepared to calculate budgeted cash flows inflows and outflows during a specific period of time.
Cash budget is useful in determining the optimum level of cash to avoid excessive cash or shortage of cash, which may arise in future. With the help of cash budget, we can arrange cash through borrowing funds in case of shortage, and we may invest cash if it is present in excess.
Cost Control and Cost Reduction
It is necessary for every business to keep a safe level of cash. Being a part of master budget, the following tasks are included in a cash budget:.
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If a firm wants to maintain cash balance of Rs 50, and in case of shortage the firm borrows funds from Bank, following cash budget is prepared:. Cost Accounting - Budgeting Analysis Advertisements.
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