Section 1: 40–50%B3

Budgeting, Forecasting, and Projection

Exam insight

BAR expects you to know the master-budget sequence cold. Sales drives production, production drives materials, labor, and overhead, and those feed the cash budget and the pro forma statements. Get the order wrong and the whole plan unravels.

What AICPA wants you to know

1Sequence the components of the master budget correctly
2Build a production budget from a sales forecast and desired ending inventory
3Construct a direct materials purchases budget
4Distinguish flexible from static budgets and explain why flexible budgets isolate efficiency from volume
5Prepare a cash budget and identify financing needs
6Compare forecasting methods (regression, moving average) and special budget approaches (zero-based, rolling)

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Budget BuildSales drives everything: run the master-budget sequence, adjust each layer for inventory, and keep depreciation out of the cash budget.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.