1. The Essentials of effective budgeting.................................................................2
2. Components of the master budget.....................................................................3
3. Prepare a cash budget....................................................................................... 5
4. prepare a budgeted statement of financial position...........................................6
5. Budgeting principles to non-manufacturing companies.....................................6
6. Exercises............................................................................................................ 6
1. Budgetary control and statistic budget reports................................................10
2. Flexible budget reports..................................................................................... 10
2.1. Develop a flexible budget...........................................................................10
3. Exercises.......................................................................................................... 11
1. Standard costs.................................................................................................. 14
1.1. Advantages................................................................................................ 14
1.2. Distinguishing between standards and budgets.........................................14
1.3. Setting standard costs................................................................................ 14
2. Direct materials variances................................................................................ 14
2.1. Analyzing and reporting variances.............................................................14
2.2. Causes........................................................................................................ 15
3. Direct labor and manufacturing overhead variances.......................................15
3.1. Direct labor variances................................................................................ 15
3.2. Causes........................................................................................................ 15
3.3. Manufacturing overhead variances............................................................15
4. Exercises.......................................................................................................... 16
1. Introduction...................................................................................................... 18
2. Capital budgeting............................................................................................. 18
2.1. Cash payback............................................................................................. 18
2.2. Net present value (NPV)............................................................................. 19
2.3. Internal rate of return................................................................................. 19
3. Exercises.......................................................................................................... 19
,CH9 – Budgetary planning
1. The Essentials of effective budgeting
Budget = formal written statement of management’s plans for a specified
future time period, expressed in financial terms based on the information
accountants can give
= a quantitative expression of a plan of action
Benefits:
- All levels of management need to plan ahead
- It gives definite objectives to evaluate performance at each level of
performance
- Creates early warning system for potential problems
- It makes the coordination of activities easier within business
- Greater management awareness
- Motivates personnel to achieve the goals
Essentials of effective budgeting
- Length of the budget
® Not necessarily 1 year
® Should be long enough to provide a realistic goal
- Budgeting process
® First there needs to be gathered information from the accounting
department
® Expected sales, general economic conditions, industry trends, …
- Human behaviors
® Effect the budget
® A good budget can inspire managers to reach higher levels of
performance
® Budgetary slack = when a manager intentionally underestimate
budgeted revenues or overestimate budgeted expenses
- Long-range planning
® budgeting
® = long range planning encompasses a period of at least 5 years
® Budgeting is on a shorter period of time, frequently a year
, 2. Components of the master budget
- Sales budget
® Prepared first
® Difficult: represents best estimate of sales revenue for budget
period
® Other budgets depend on the sale budget
Expected unit sales
*unit selling price
= total sales
- Production budget
® Shows the number of units of a product we need to produce to
meet the anticipated sales demand
Expected unit sales
+ desired ending
inventory
= total required units
- beginning inventory
= required production
units
- Direct materials budget
® Shows quantity and costs of DM we need to purchase
Units we will produce
* direct materials per unit
= Total kgs needed
+ desired ending inventory
DM
= total materials required
- beginning inventory DM
= DM we need to purchase
* cost per kg
= total cost of DM
purchases
- Direct labor budget
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
√ Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, Bancontact of creditcard voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper MarilynDV. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €4,99. Je zit daarna nergens aan vast.
