MBA - Lecture 6

What does the strategic planning process relate to?

• Large entities only

• Shorter term planning (usually less than 1 year)

• Longer term planning (often 3–5 years)

• Shorter term planning (usually 1–3 months)

Which of the following is not a benefit of budgeting?

• 1. Management can plan ahead

• 1. An early warning system is provided for potential

     problems

• 1. It enables disciplinary action to be taken at every

     level of responsibility

• 1. The coordination of activities is facilitated

Which of the following describes a way in which budgeting can assist in decision making?

• Identifying expected cash shortages

• Determining inventory levels

• Setting production targets for managers

• All of the options listed

What is commonly the first step in the budgeting process?

• Preparation of initial budget estimates

• Preparation of the master budget and sub-budgets

• Consideration of past performance

• Assessment of expected trading and operating conditions

The government’s Department of Education and Training would be unlikely to prepare which type of budget?

• Production budget

• Expenses budget

• Cash budget

• Program budget

What is the term used to describe the difference between budgeted amounts and an entity’s actual results?

• Control tool

• Variance

• Excess

• Budget error

Which type of budget is the schedule of receipts from accounts receivable (debtors) prepared to provide information for?

• The sales budget

• The production budget

• The budgeted statement of financial position

• The cash budget

Digital Stuff Pty Ltd is planning to purchase equipment costing $45 000. The planned delivery date is 11 April with settlement on that date. On 17 January, Digital Stuff Pty Ltd paid a deposit of $15 000. What is the amount that will appear in the cash budget for the quarter ending 31 March?

• $0; no cash flows are recorded until settlement date

• Outflow of $15 000

• Outflow of $30 000

• Outflow of $45 000

Which of these is not a strategy to reduce cash outflow?

• Make use of credit terms offered by suppliers

• Minimise inventory on hand

• Sell unnecessary non-current assets

• Defer capital expenditure

Which of the following budgeted expenses has a favourable variance?

• Advertising $30 000; actual advertising

  $40 000

• Telephone $4000; actual telephone $3700

• Salary $52 000; actual salary $56 000

• Interest $500; actual interest $500