10014_041910_18 - 1. Always start with Sales Budget ($...

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Chapter 9 – Budgeting Responsibility accounting: managers help accountable for items under their control 1. Thru budgeting – future plans in quantitative form 2. Master budgeting – budgets for all areas of company A. Proforma statements (B/S, I/S, Cash Budgets) 3. Budget Process – 1 fiscal year A. 1 st quarter in months Balance: detail only by quarters B. Continuous perpetual budget 12 month budget which rolls forward 1 quarter as current quarter is complete Approach: Traditional – start with last year’s budget and adjust increase or decrease depending on plan o Incremental approach – use last year as baseline Zero-based – must justify ALL budgeted expenditures, not just changes
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Unformatted text preview: 1. Always start with Sales Budget ($ sales and units) and always include expected cash collections 2. Production Budget: Number of units produced to meet sales demand and provide Ending Inventory for each period 3. DM Budget MUST start with production units not sales units Number of DM units must be purchased to meet production demands Provide desired Ending Inventory for each period Remember: Production + DM for a quarter o Beginning Inventory = Beginning Inventory for the first month of the quarter o Ending Inventory = Ending inventory for the last month of the quarter...
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