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Tuesday, 9 December 2014

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Question:
Define sale budget and what is the purpose of sales budget?
Answer:
Sales Budget generally forms the fundamental basis on which all other budgets are prepared/estimated. The budget is based on projected sales to be achieved in a budget period. The Sales Manager is directly responsible for the preparation and execution of this budget. The main purpose of sale budget is to make a forecast about sales and try to achieve spacified level of budget.



Question:
What is Margin Safety and what is Margin Safety ratio?
Answer:
The margin of safety is the difference between budgeted sales volume and break-even sales volume; it indicates the vulnerability of a business to a fall in demand. It is often expressed as a percentage of budgeted sales Margin of safety = Budgeted sales – Break-even sales Margin safety rario = Budgeted sales – Break-even sales / sales x 100


Question:
What is the object or the purpose of budget?
Answer:
Objective of Budget 1. Profit maximization. 2. Maximization of sales. 3. Volume growth. 4. To compete with the competitors. 5. Development of new areas of operation. 6. Quality of service. 7. Work-force efficiency.


Question:
What is the purpose of "Production budget"?
Answer:
This budget provides an estimate of the total volume of production distributed product-wise with the scheduling of operations by days, weeks and months and a forecast of the inventory of finished products. Generally, the production budget is based on the sales -budget. The responsibility for the overall production budget lies with Works Manager and that of departmental production budgets with departmental works management Production budget may be expressed in physical or financial terms or both in relation to production.


Question:
Definition of Management Accounting.
Answer:
“Process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information (both financial & operating) used by the management to plan, evaluate and control within an organization and to assure use of and accountability for its resources.”



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