Chapter 7 Study Plan

Knowledge Targets

I can define the following terms as they relate to our unit:

Budget Planning Budget Flexible Budget Cash Budget

Master Budget Activity Variance Revenue Variance Spending Variance

Fixed Cost Variable Cost Standard Cost Standard Hours

Standard Price Variance Quantity Variance Efficiency Variance

Rate Variance Price Variance Materials Labor

Variable Overhead Fixed Overhead Selling expense Administrative expense


Reasoning Targets

  • I can understand the difference between a planning budget and a flexible budget.
  • I can identify costs as fixed cost or variable cost.
  • I can understand the purpose of using a budget for businesses.
  • I can analyze differences between budget and actual and explain possible reasons for the variances.
  • I can analyze and explain labor rate and efficiency variances.
  • I can analyze and explain material price and quantity variances.
  • I can understand the use of standards (including cost, hours or price) for budgeting and analysis.

Skill Targets

  • I can prepare a sales and production budget (or purchases budget for merchandiser).
  • I can prepare a selling and administrative expense budget.
  • I can prepare a cash budget including schedules of receivables and payables.
  • I can prepare a budgeted income statement and budgeted balance sheet.
  • I can prepare a master budget including budgets for sales, purchases, selling and administrative expenses, cash, income statement and balance sheet.
  • I can prepare a flexible budget based on the actual level of production.
  • I can prepare a flexible budget performance report analyzing difference between budget and actual.
  • I can calculate variances for materials and labor.

Click Budgeting Study Plan for a printable copy.

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