After completing this chapter, you should be able to
Understand the difference between operating budgets and capital expenditure budgets.
Understand what budget expenses will most likely be identifiable versus allocated expenses.
Understand how to build an operating budget.
Understand the difference between static and flexible budgets.
OVERVIEW
A budget is an organization-wide instrument. The organization’s objectives define the specific activities to be performed, how they will be assembled, and the
particular levels of operation, whereas the organization’s performance standards or norms set out the anticipated levels of individual performance. The budget
is the instrument through which activities are quantified in financial terms.
Sample Solution