Management Accounting & Budgeting Flashcards

What is the primary purpose of management accounting?

Answer: To assist in internal decision-making

Management accounting focuses on providing internal reports for decision-making, planning, and control within an organization.

Which of the following is an example of a fixed cost?

Answer: Rent

Rent remains constant regardless of output levels, making it a fixed cost in budgeting and planning.

What is variance analysis used for in budgeting?

Answer: To identify and explain differences between planned and actual outcomes

Variance analysis compares actual results to budgeted figures to identify and explain deviations.

Which of the following is a characteristic of marginal costing?

Answer: Considers only variable costs

Marginal costing considers only variable costs for decision-making, making it useful for short-term financial decisions.

What is a rolling budget?

Answer: A budget updated monthly or quarterly

A rolling budget is continuously updated, adding a new budgeting period as the current one ends.

In cost-volume-profit (CVP) analysis, what is the break-even point?

Answer: Point where total costs equal total revenues

The break-even point is where total revenues equal total costs, resulting in no profit or loss.