Briefly Describe the Attributes of an Ideal Budgetary System

question 95

Essay

Briefly describe the attributes of an ideal budgetary system. What features of budgeting have been identified that encourage positive behaviour?

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Definitions:

Direct Labor-hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products or job orders.

Variable Overhead Efficiency Variance

The difference between the expected (standard) and actual variable overhead costs based on the actual level of an activity.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with the volume of production, such as utilities for machinery.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production achieved.