Glossary – Chapter 21

• bottom-up participative budgetA budget approach driven by the direct participation of lower-level employees
• budget committeeA group of senior managers from each business unit charged with leading the budget preparation and review process
• budget slackThe influence of behavior to "pad" a budget via misstating expected revenues and/or expenses; to create more favorable budget vs. actual performance appraisals
• cash budgetAn essential budget component detailing planned cash receipts, disbursements, and financing actions
• continuous budgetA budget that is constantly updated; as one month/quarter is completed another is added to the set the projections
• direct labor budgetA budget that details expected direct labor needs, along with the related costs of labor
• direct material purchases budgetA budget that details expected direct material purchases, along with the related cash payments
• encumbranceA budgetary restriction occurring in advance of a related expenditure
• factory overhead budgetA budget that details the anticipated factory overhead, including calculations related to the allocation of such amounts
• flexible budgetA budget that covers a range of potential outcomes by relating expense levels to the potential revenues
• incremental budgetingA budgeting approach where the prior year experience sets a base line for a new budget; changes are made based on new information but the base need not be rejustified in detail
• master budgetAlso known as the comprehensive budget; an integrated set of articulated budgets relating to numerous operational subcomponents (labor, material, overhead, SG&A, etc.)
• pro forma financial statements"As if" budgeted financial statements
• production budgetA budget that details planned levels of production; takes into account sales and inventory build/decline
• sales budgetA budget that details anticipated sales levels
• SG&A budgetA budget that details anticipated selling, general, and administrative costs
• static budgetA budget that does not anticipate alternative outcomes; estimated sales and expenses are fixed and establish the relevant benchmarks
• top-down mandated budgetA budget approach where upper level management establishes parameters under which the budget is to be prepared
• zero-based budgetingA budget approach where each expenditure item must be justified for each new budget period