Errol Clarke Assignment 4-1 10/25/16 ACCT 202 – PRINCIPLES OF MANAGERIAL ACCOUNTING PROFESSER STEVE MARKOFF PREPARATION QUESTIONS – BUDGETING AND PROFIT PLANNING   Assignment 4-1   The questions below will be discussed in detail in class:   What is a budget?  By whom is a budget prepared?   When are budgets prepared?   Why do organizations engage in the budgeting process?  What are the benefits?  Any disadvantages?   What is the “Financial Budget”?  How does it differ from the “Operating Budget”?   What is a master budget?  What are the components that go into a master budget?   What’s “participative budgeting”?  Do you think that this is desirable?  What advantages does it have?  Any disadvantages?   Which is the first budget prepared in a master budget and why?   What is the difference between how budgets are used in a) planning and b) controlling? Why is there an inherent conflict between these two uses?   Explain the difference between a static budget and a flexible budget?   Which type of budget would you consider more appropriate for performance evaluation of a manufacturing department, a static or flexible budget?  Why?   Why is cost classification by behavior such an important part of the budgeting process?