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chapter20handout - Features of a Budget • Timeframe –...

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Master Budgets and Performance Planning Chapter 20
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What is a budget?
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Functions of Management Planning Organizing Directing Controlling
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Steps in the Budgeting Process Establish specific goals (Planning) Execute plans to accomplish the goals (Organizing & Directing) Periodically compare actual results with the goals (Controlling)
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Content and Form
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Master Budget A set of budgets that consolidates an organization’s financial information into budgeted financial statements for a future period of time.
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Typical Budgets Sales Budget Production (Purchases) Budget Cost of Goods Manufactured (Sold) Budget Selling and Administrative Expense Budget Budgeted Income Statement Budgeted Balance Sheet Cash Budget ** Capital Expenditures Budget **
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Advantages of a Budget
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Unformatted text preview: Features of a Budget • Timeframe – Any time frame management wants . An annual budget is often divided into quarterly or monthly periods. # of time frames used depends on company’s goals. • Specific content – Determined by what you are budgeting. Examples are sales dollars, number of units, direct labor hours, direct labor dollars, direct materials purchases, etc. SWOT Analysis and Examples • Strengths – Experienced mgt, high quality product, loyal customers • Weaknesses – Old plant & equip, excess cash in low return investment • Opportunities – Acquisition, new product development, foreign markets • Threats – Product liability, new technology, low price competition, OSHA/EPA regulations...
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