Mangerial Accounting Chapter 7

Mangerial Accounting Chapter 7 - Managerial Accounting...

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Managerial Accounting Chapter 7 – Profit Planning Basic Framework of Budgeting Budget – quantitative plan for acquiring and using resources over a specified time period Master Budget – Summary of company’s plans including targets for sales, production, and financing activities. 2 Purposes of Budgets: 1) Planning – Developing goals and preparing various budgets to meet those goals 2) Control – Mgmt making sure that everyone is working to achieve goals set out in the planning stage Advantages of Budgeting: 1) Budgets communicate the activities of the entire organization 2) Budgets force managers to think about and plan for the future. 3) Provides means of allocating resources 4) Can uncover possible bottlenecks before they occur 5) Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. 6) Budgets define goals that can serve as benchmarks for evaluating subsequent performance. Responsibility Accounting – Manager should be held responsible for only those items that he can control to a significant extent. -
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This note was uploaded on 02/28/2010 for the course AEM 3230 taught by Professor Little,j.e. during the Spring '08 term at Cornell.

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Mangerial Accounting Chapter 7 - Managerial Accounting...

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