【正文】 meet the additional demand. While leasing a fabrication machine would usually be a fixed cost, even fixed costs can increase when large production changes occur.窗體底端Differentiating between fixed and variable costs is an important part of creating a budget. Check your understanding of these two categories.Exit activityAllocated costsOperating budgets may include allocated costs—costs associated with operating the overall pany that are not tied to individual products or departments. The most significant allocation is usually overhead. This figure typically includes the office rent for the building occupied by corporate headquarters, and salaries and expenses associated with corporate management. How these costs are attributed to individual departments varies from one pany to another. Some organizations may allocate overhead to certain department budgets—those that produce revenue, for example—and not others.171。 The costs that decrease—the variable costs—involve costs that will change depending on the specific number of units produced, such as shipping. The costs that stay the same—the fixed costs—involve expenses, such as rent for the factory, that will not change over a 100unit decrease in production.Both fixed and variable costs will stay the same.Not the best choice.s pany decreases production to 400 units, what happens to the corresponding fixed and variable costs?The fixed costs increase, while the variable costs remain the same.Not the best choice. Actually, a 100 unit decrease in production would lower the variable costs (the costs that change in direct proportion to production). This decrease would not affect fixed costs. For instance, Sophie39。 The following statistics indicate fixed and variable costs for her pany at different levels of production of their topselling product, the MathTech calculator. At 0 units of production (no MathTech calculators produced), CalcuTech39。ActivityWhen is a fixed cost not fixed?How to Categorize ExpensesFixed and variable costsActivity: When is a fixed cost not fixed?窗體頂端Sophie39。 Previous |Next Sales missions Power and gas used in manufacturing Packaging Raw materials Marketing and advertising Interest payments Equipment leases RentHow to Categorize ExpensesFixed and variable costsPlot the Fixed Costs curve and the Variable Costs Curve on a graph with Money on the vertical axis and Units on the horizontal axis. You39。 Previous |Next187。While the alternative approaches may result in greater accuracy and functionality, some can consume so much time that they distract managers from other critical activities.171。s fiscal year.Rolling budgetThe budget is continuously updated so that the time frame remains stable while the actual period covered by the budget changes. For example, as each month passes, a oneyear rolling budget would be extended by one month so that there would always be a oneyear budget in place.Forecast valuesStatic budget(traditional)Presents one forecast for a given time period and is not changed during the life of the budget.Flexible budgetBudgeted revenues and costs are adjusted during the budget period according to predetermined variances between the budgeted and actual output and revenue.Forecasting processIncremental budgeting(traditional)The previous period39。 rely on inappropriate measures。Approaches to BudgetingTraditional budgeting and alternate approachesMei Po holds up two different kinds of budget spreadsheets.Many organizations use a traditional budget—a budget that covers a one year period and presents forecasts that do not change during the life of the budget cycle. Companies use traditional budgets because they are easy to put together and simplify coordination of budget assumptions across different departments. Traditional budgets, however, have been under growing attack from those who feel that they no longer serve a modern organization39。 Previous |Next187。 Cash budgets plot the expected cash balances the organization will experience during the forecast period, based on information provided in operating and capital budgets. Cash budgets are prepared by the finance department and are critical to ensuring that the pany has sufficient liquidity (cash and credit) available to meet expected cash disbursements.171。 Operating budgets reflect daytoday expenses and depreciation (the current portion of capitalized expenses). They typically cover a oneyear period.187。s a difficult thing to do. One thing you can always do is ask: Well, how would this number look if things were really different? So, you subject the thing to stress and with key numbers—even if you do it informally—you should always do that. Almost everything you do depends on understanding numbers, and all numbers can be difficult to understand. So interpret numbers with care, as they all have a certain risk attached to them, and should be treated with the proper respect.Sir Peter MiddletonBarclays GroupSir Peter Middleton enjoyed a long and distinguished career in HM Treasury spanning 30 years, ultimately ascending to bee Permanent Secretary from 1983 to 1991.He spent the next 13 years with Barclays as Group Deputy Chairman and Executive Chairman of its investment bank, BZW. In 1997 he became Chairman of Barclays Capital.In May 1998 he relinquished his executive responsibilities, but remained a NonExecutive Director of Barclays and Barclays Bank. Later that year he resumed the helm following the unexpected resignation of the Chief Executive.He was then appointed Group Chairman in April 1999, and in October stepped down as Group Chief Executive following the appointment of Matthew Barrett. He left Barclays in late 2004.Sir Peter Middleton took on the Chairmanship of Camelot, the operator of The National Lottery, in September 2004.He is also Deputy Chairman of United Utilities, and is on the Board of the National Institute of Economic and Social Research