Budgeting, cost management, and performance measurement concepts tested on CMA Part 1.
40 cards · basic cards · AI-written, checked twice. Edit anything.
- What is a master budget?
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Comprehensive plan of expected revenues, costs, and profit for the organization- Static budget vs flexible budget
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Static: fixed for one activity level. Flexible: adjusts to actual activity level- What is zero-based budgeting?
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Building budget from scratch with every expense justified, rather than adjusting prior year- What is a rolling forecast?
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Continuously updates by dropping oldest period and adding newest period to maintain same time horizon- What is incremental budgeting?
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Adjusting prior year budget by a percentage or amount- What is a budget variance?
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Difference between budgeted amount and actual amount- What does a favorable variance indicate?
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Actual result was better than budgeted (higher revenue or lower cost)- What is a volume variance?
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Portion of budget variance due to difference in activity level- What is an efficiency variance?
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Portion of cost variance due to actual vs standard quantity or efficiency used- What is a rate variance?
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Portion of cost variance due to actual vs standard price per unit- How is direct material quantity variance calculated?
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(Actual quantity - Standard quantity) times Standard price- How is direct labor rate variance calculated?
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(Actual rate - Standard rate) times Actual hours- How is direct labor efficiency variance calculated?
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(Actual hours - Standard hours) times Standard rate- What is a standard cost?
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Predetermined cost for production based on expected efficiency and prices- What is a cost driver?
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Factor that causes costs to increase or decrease, such as machine hours or labor hours
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