ACCT I S 211 Study Guide - Midterm Guide: Sensitivity Analysis, Cash Flow Statement, Cash Cash
13 Oct 2016
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Why budget: determines the planned level of most variable costs. Budget quantitative expression of the money inflows and outflows that reveals. Elements of budgeting and what resources they account for: coordination problems: flexible resources that create variable costs. Resources that can be acquired or disposed of in the short-term. Lumber or glue in a furniture factory: intermediate-term capacity resources that create fixed costs. Forecasting the need for rental storage space that might be contracted on a quarterly, semiannual, or annual basis: resources that, in the intermediate run and long run, enhance the potential of the organization"s strategy. Discretionary expenditures that include r&d, employee training, the maintenance of capacity resources, advertising, and promotion. Do not provide capacity, nor do they vary with the level of organization activity: long-term capacity resources that create fixed costs. New fabrication facility for a computer chip manufacturer, which might take several years to plan and build and might be used for 10 years.
