Rolling Budget – NBC Institute

PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

Question

You are the management accountant of a large manufacturing company in Kaduna. A management retreat has been planned for next week to set the agenda for the preparation for next year’s budget.

Required:

a. Outline the key stages in the planning process that link long-term objectives and budgetary control. (8 Marks)

b. Explain the meaning of the terms ‘fixed budget’, ‘rolling budget’, and ‘zero-based budget’, and discuss the circumstances under which each budget might be used. (8 Marks)

c. Discuss whether time series analysis may be preferred to linear regression as a way of forecasting sales volume. (4 Marks)

Answer

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Tags: Budgeting, Fixed Budget, Forecasting, Planning Process, Rolling Budget, Time Series Analysis, Zero-Based Budget
Level: Level 2

Topic: Budgeting and Budgetary Control

MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

Question

The Finance Manager of Baya Ltd has been criticised for using an incremental budget method in preparing the company’s budget. She, however, needs to respond to the issues raised at a board meeting and as a result, she is considering using different budgeting methods for the year-end 31 December 2022. She has asked you, the Management Accountant, to do some preliminary work to help her decide on which of the methods to use. She believes a rolling budget would be ideal for the fast-growing Baya Ltd in a relatively high inflationary country.

Baya Ltd’s incremental budget for the year-end 31 December 2022 is given below:

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Revenue (GH¢’000)	17,520	17,958	18,407	18,867	72,752
Cost of sales	9,636	9,877	10,124	10,377	40,014
Gross profit	7,884	8,081	8,283	8,490	32,738
Distribution costs	(1,577)	(1,616)	(1,657)	(1,698)	(6,548)
Administration	(4,214)	(4,214)	(4,214)	(4,214)	(16,856)
Operating profit	2,093	2,251	2,412	2,578	9,334

The actual figures for quarter 1 (which has just been completed) are:

On the basis of the quarter 1 results, sales volume growth of 3% per quarter is now expected.

Required:
i) Explain how Baya Ltd will operate a rolling budget.
(2 marks)

ii) Recalculate the quarterly rolling budget for Baya Ltd for the last three quarters of the year 2022 and the first quarter of 2023.
(8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgetary Control, Incremental Budgeting, Rolling Budget
Level: Level 2

Topic: Budgetary control
Series: AUG 2022

PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

Question

You are the management accountant of a large manufacturing company in Kaduna. A management retreat has been planned for next week to set the agenda for the preparation for next year’s budget.

Required:

a. Outline the key stages in the planning process that link long-term objectives and budgetary control. (8 Marks)

b. Explain the meaning of the terms ‘fixed budget’, ‘rolling budget’, and ‘zero-based budget’, and discuss the circumstances under which each budget might be used. (8 Marks)

c. Discuss whether time series analysis may be preferred to linear regression as a way of forecasting sales volume. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting, Fixed Budget, Forecasting, Planning Process, Rolling Budget, Time Series Analysis, Zero-Based Budget
Level: Level 2

Topic: Budgeting and Budgetary Control

MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

Question

Baya Ltd’s incremental budget for the year-end 31 December 2022 is given below:

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Revenue (GH¢’000)	17,520	17,958	18,407	18,867	72,752
Cost of sales	9,636	9,877	10,124	10,377	40,014
Gross profit	7,884	8,081	8,283	8,490	32,738
Distribution costs	(1,577)	(1,616)	(1,657)	(1,698)	(6,548)
Administration	(4,214)	(4,214)	(4,214)	(4,214)	(16,856)
Operating profit	2,093	2,251	2,412	2,578	9,334

The actual figures for quarter 1 (which has just been completed) are:

On the basis of the quarter 1 results, sales volume growth of 3% per quarter is now expected.

Required:
i) Explain how Baya Ltd will operate a rolling budget.
(2 marks)

ii) Recalculate the quarterly rolling budget for Baya Ltd for the last three quarters of the year 2022 and the first quarter of 2023.
(8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgetary Control, Incremental Budgeting, Rolling Budget
Level: Level 2

Topic: Budgetary control
Series: AUG 2022

Question Tag: Rolling Budget

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PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

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PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

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MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

You're reporting an error for "MA – Aug 2022 – L2 – Q3b – Budgetary control"

PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control

Outline key stages in linking long-term objectives to budgetary control, and explain different budgeting types and forecasting methods.

You're reporting an error for "PM – Nov 2024 – L2 – Q3 – Budgeting and Budgetary Control"

MA – Aug 2022 – L2 – Q3b – Budgetary control

This question focuses on explaining how a rolling budget works and calculating a revised budget for Baya Ltd.

You're reporting an error for "MA – Aug 2022 – L2 – Q3b – Budgetary control"

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