chapter 9

chapter 9 - Profit Planning Chapter Nine Accounting 2102...

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Accounting 2102 Chapter Nine Profit Planning
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Accounting 2102 2 Budgeting . . . What is a budget? Quantitative plan What are budgets used for? Planning Communicating and coordinating Allocating Controlling budg vs actual Evaluating
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Accounting 2102 3 Behavioral Considerations Participative (self-imposed) . . . employees participate top down . . . upper management alone impact of budgets that are too “tight” vs too “loose” Revenue goals too high, expense goals too low= tight reasons for budgetary slack uncertainty for appearances prepare for budget cuts
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Accounting 2102 4 Components of Master Budget (aka profit plan) Sales Budget* Production Budget* DM Purchases Budget* DL Budget OH Budget Capital Expenditure Budget Cash Budget (Receipts and Disbursements) Pro Forma Financial Statements * will go in to more detail on next few slides . . .  watch for cost behavior
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Accounting 2102 5 Sales Budget anticipated number of units to be sold x sales price per unit approximate sales dollar figure
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Accounting 2102 6 Production Budget only budget totally measured in units rather than dollars number of units required for anticipated sales level + number of units desired in ending inventory = total number of units needed - number of units in beginning inventory = number of units to produce
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Accounting 2102 7 DM Purchases Budget number of raw material needed for production + number of raw materials desired in ending inventory = total number of raw materials needed - number of raw materials in beginning inventory = number of raw materials to purchase x cost per raw material = DM (in dollars) to purchase
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Accounting 2102 8 Sugar High, Inc.                Sugar High, Inc.  a manufacturer of candy, is preparing its STATIC master budget for the  coming year.  Its sales department has made the following sales forecast: April, 20,000 units; May, 50,000  units; June, 30,000 units; July, 25,000 units; August, 15,000 units. All units sell for $10  each. Ending finished goods inventory should be 20% of the next month’s sales.
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This note was uploaded on 05/08/2008 for the course ACCT 2102 taught by Professor Farmer during the Spring '08 term at UGA.

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chapter 9 - Profit Planning Chapter Nine Accounting 2102...

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