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Types of budget – ACCA Performance Management (PM)

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  1. Thank you for the clear and concise lectures Mr. Moffat, just been thinking, is there a difference in meaning between the principal budget factor and limiting factor covered under decision making techniques.

  2. Hi John, some types of budgets which are part of syllabus are missing in notes and lecture.
    Activity based budget, feed forward budgets and there are some other stuff in acca approved text books which are missing in your notes.
    these things are worrying me.
    btw thanks for the free lecture and notes.

  3. Thanks for the video! When you prepared the flex budget example, your showed the budget as revenue, variable costs, contribution, fixed overheads and profit. In the exam, would it require to be presented as such or can it also simply be presented as revenue minus all costs equals profit? Thanks again.

  4. Sir, the answer to example 2 (Chapter 11) “statement” part is not covered. The statement is summarised for management but what is the statement referring to?? Is it refer to the actual activity level column?? I don’t understand the presentation of this statement even though the actual profit $7500 is the same as the columnar form of actual profit.

    Thank you

      • Do you mean the budgeted profit is relates to original budgeted profit? But the variance for variable cost was the difference between flexed and actual, still a bit confusing.

      • We compare the actual costs with the flexed costs to see if the manager responsible for the particular cost was paying the right price per. unit or not. If they were paying too much per unit then we need to find out why.

        However this lecture was primarily about flexing the budgets. The variances are discussed in detail (with much more arithmetic involved) in the later chapters specifically on variance analysis.

  6. Hi John,

    Thanks for your excellent lectures, i am confused on the below question available on practice question. Is the below statement are correct.

    Question – Rolling budgets are always prepared for the following 12 months period.

    from my understanding i answered as correct, but it was incorrect. bit confused could you please explain why its incorrect.

    • I would really need to see the whole question. However it is probably because although rolling budgets are normally for 12 month periods, that is not a rule – they could be done (for example) for six month periods.

  7. Dear John, in an environment where rolling budget is practiced, the sole purpose of this budget comes to my mind is only to check the performance on monthly basis and revised subsequent period budget. So if the purpose is to have a check and revision of budget each month so why consideration is given to 11+1 months? why not just 2 to 3 subsequent months only?

  8. Thanks John. Indeed it’s a good lecture.
    One issue is the timing when explaining rolling budget dec 07: jan 08 -feb 08.. I was expecting this to be a one year duration as presented in subsequent period. Thnks

  10. Hi sir, I don’t understand how you actually calculate the flexed budget and also on how you arrived at $5 for revenue, 2.5 for labour and 1.5 for overhead. I would’t mind also if you explain why flexed budget is needed and it usefulness.

    • The purpose of the flexed budget is so we can compare what actually happened with what should have happened for the actual level of activity. I do explain this in the lecture and expand on it in the following lectures on variance analysis.

      As far as the revenue and the variable costs are concerned, the budgeted revenue was 100,000 for sales of 10,000 units and therefore the revenue should be 100,000/10,000 = $10 per unit. It is the same logic for the variable costs.

  14. Thanks John. The flexed budget prepared at the end of the budget period and is based on the actual level of activity using the original standard price and cost. The difference between the flexed budget and actual result is the variance.

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