ch08tc - COST MANAGEMENT 1 Accounting & Control...

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Unformatted text preview: COST MANAGEMENT 1 Accounting & Control HansenMowenGuan Chapter 8 Budgeting for Planning and Control 2 1. Define budgeting, and discuss its role in planning, controlling, and decision making. 2. Prepare the operating budget, identify its major components, and explain the interrelationships of the various components. 3. Identify the components of the financial budget, and prepare a cash budget. 4. Define flexible budgeting, and discuss its role in planning, control, and decision making. 5. Define activity-based budgeting, and discuss its role in planning, control, and decision making. 6. Identify and discuss the key features that a budgetary system should have to encourage managers to engage in goal-congruent behavior. Study Objectives 3 The Role of Budgeting in Planning and Control 4 The Role of Budgeting in Planning and Control Types of budgets Master budget Operating budgets Financial budgets Time frame Annual period Multi-year rolling budget 5 The Role of Budgeting in Planning and Control Gathering information Forecasting sales Forecasting other variables The master budget starts with the sales forecast, which is basis for the sales budget. All other operating and most financial budgets are generated from the sales budget. 6 The Role of Budgeting in Planning and Control 7 The first budget is the sales budget which is based on the sales forecast. Starting point for Production Budget Starting point for Marketing Expense Budget Schedule 1 (in thousands) Goes to Budgeted Income Statement Preparing the Operating Budget 8 Starting point for Direct Materials Purchases Budget Starting point for Direct Labor Budget Schedule 2 (in thousands) pg 254 Preparing the Operating Budget 9 Goes to Cost of Goods Sold Budget Schedule 3 (in thousands) pg 256 Preparing the Operating Budget * Follows the inventory policy of having 8 million pounds of materials on hand at the end of the first and second quarters and 5 million pounds on hand at the end of the third and fourth quarters. 10 Goes to Cost of Goods Sold Budget Schedule 4 (in thousands) pg256 Starting point for Overhead Budget Preparing the Operating Budget 11 Goes to Cost of Goods Sold Budget Schedule 5 (in thousands) pg257 Preparing the Operating Budget *Includes $200,000 of depreciation in each quarter. 12 a Amounts taken from Schedule 3....
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This note was uploaded on 11/14/2009 for the course ACC 2338 taught by Professor Tba during the Fall '09 term at Randolph College.

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ch08tc - COST MANAGEMENT 1 Accounting & Control...

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