MGMT 122 Chapter Notes - Chapter 8: Income Statement, Direct Labor Cost, Budget
Document Summary
A budget is a detailed plan for the future that is usually expressed in formal quantitative terms. Once a budget is established, actual spending is compared to the budget to make sure that the plan is being followed. Budgets are mainly used for planning and control: planning involves developing goals and preparing various budgets to achieve those goals, control involves gathering feedback to ensure that the plan is properly executed or modified as circumstances change. Responsibility accounting says that a manager should be held responsible for only the items that they can actually control to a significant extent. This personalizes accounting info by holding individuals responsible for revenues and costs. Operating budgets ordinarily cover a one year period corresponding to the company"s fiscal year. Continuous or perpetual budget can also be used- they are 12 month budget that rolls forward one month or quarter as the current month/quarter is completed.
