Acc550-ch_6 - ACC550 CHAPTER 6 MASTER BUDGET &...

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ACC550 CHAPTER 6 Budget 1) A budget is a detailed plan that sets specific targets for acquiring and using resources 2) It covers a specified future time period (one quarter, one year, five years). 3) It reflects planned activity levels for a) Sales b) Production c) Distribution d) Financing 4) The revenues budget drives the rest of the budget process Master budget 1) The master budget is a summary of all other individual budgets 2) Revenues budget a) It is expressed in units and dollars b) It drives all other individual budgets 3) Production budget a) It reflects unit of production needed to meet sales budget b) It reflects desired ending inventory levels c) Basic formula (derivation of basic inventory flow model) Budget sales units XX Add: Desired FG ending inventory units XX Less: FG beginning inventory units XX Required FG production units XX 4) Direct materials usage and purchases budgets a) These reflect direct materials required to meet the production budget
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Acc550-ch_6 - ACC550 CHAPTER 6 MASTER BUDGET &...

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