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budgeting

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › budgeting

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 11, 2021 at 5:07 am #631108
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    Sir what is the difference between increase in budgetary slack and budget padding

    August 11, 2021 at 8:15 am #631142
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    Budgetary slack and budget padding are really the same thing.

    It is when the manager puts more in the budget for expenses than they really expect to need.

    August 12, 2021 at 4:12 pm #631116
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    And secondly

    Sir below are some problems associated with standard costing

    1. Continuous improvement maybe more important than meeting standards

    2. Incentives to build inventories

    3. Standard cost reports may not be timely

    Sir I cannot really understand what exactly is the problem with the above statements

    Could you please explain it with examples

    Thank you

    August 12, 2021 at 4:35 pm #631370
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    You have already asked about the first two, and I have explained.

    All reports need to be timely (i.e. up-to-date). Standard costs are often only calculated once a year and so might be realistic when calculated, but might get out of date very quickly.

    August 15, 2021 at 11:45 am #631511
    johnbriane
    Member
    • Topics: 170
    • Replies: 160
    • ☆☆☆

    Sir can you tell me due to what reasons might the standard get out of date ?

    Could it be due to economical problems such as
    The covid

    August 15, 2021 at 12:31 pm #631640
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    When the standard cost is calculated we use the current information such as the current cost of materials, the current wage rate, the current amount of materials needed, the current time taken to produce etc. etc.. During the year the cost of materials might change, the wages we pay might change, the time taken to produce might change and so on. So the standard cost might change and the original standard cost become out of date.

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