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