Chapter 6_PPT - 1 Master Budget and Responsibility...

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2/16/2016 1 Master Budget and Responsibility Accounting 1. Describe the master budget and explain its benefits 2. Describe the advantages of budgets 3. Prepare the operating budget and its supporting schedules 4. Use computer-based financial planning models for sensitivity analysis 5. Describe responsibility centers and responsibility accounting 6-2 6. Recognize the human aspects of budgeting 7. Appreciate the special challenges of budgeting in multinational companies 6-3
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2/16/2016 2 A budget is the quantitative expression of a proposed plan of action by management for a specified period. A budget is an aid to coordinating what needs to be done to implement that plan. A budget generally includes both the plan’s financial and nonfinancial aspects and serves as a blueprint for the company to follow in an upcoming period. 6-4 Communicate directions and goals to different departments of a company to help them coordinate the actions they must pursue to satisfy customers and succeed in the marketplace. Judge performance by measuring financial results against planned objectives, activities, and timelines to learn about potential problems. Motivate employees to achieve their goals. 6-5 To develop successful strategies, managers must consider questions such as the following: 1. What are our objectives? 2. How do we create value for our customers while distinguishing ourselves from our competitors? 3. Are the markets for our products local, regional, national or global? 4. What trends affect our markets? 5. What organizational and financial structures serve us best?
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