Class 3a Lecture Notes SM10

Class 3a Lecture Notes SM10 - 6/11/2010 1 Click to edit...

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6/11/2010 1 1 Click to edit Master title style Lewis University MBA 550 Financial Accounting 1 Budgeting 2 Click to edit Master title style 1. Describe budgeting, its objectives, and its impact on human behavior. After studying this chapter, you should be able to: 2 2. Describe the basic elements of the budget process, the two major types of budgeting, and the use of computers in budgeting. 3 Click to edit Master title style 3. Describe the master budget for a manufacturing business. Pt h b i i t t t After studying this chapter, you should be able to: 3 4. Prepare the basic income statement budgets for a manufacturing business. 5. Prepare balance sheet budgets for a manufacturing business.
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6/11/2010 2 4 Click to edit Master title style Describe budgeting, Objective 1 22-1 4 its objectives, and its impact on human behavior. 5 Click to edit Master title style Budget 22-1 A budget charts a course for a business by outlining the 5 plans of the business in financial terms. 6 Click to edit Master title style 22-1 Housing 30% Transportation Entertainment 6% Savings 8% Estimated Portion of Your Total Monthly Income That Should Be Budgeted for Various Living Expenses 6 Utilities 5% Food 20% Medical 5% Other 4% Clothing 7% 15%
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6/11/2010 3 7 Click to edit Master title style ± Establishing specific goals ± Executing plans to achieve the Objectives of Budgeting 22-1 7 goals ± Periodically comparing actual results to the goals 8 Click to edit Master title style 22-1 8 9 Click to edit Master title style Planning 22-1 Budgeting supports the planning process by requiring all organizational units to establish their goals for the upcoming period. 9 These goals motivate individuals and groups to perform at high levels . Planning also motivates employees to attain goals and improve overall decision making .
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6/11/2010 4 10 Click to edit Master title style Directing 22-1 The budget can be used to direct and coordinate 10 operations in order to achieve the stated goals. 11 Click to edit Master title style 22-1 The budgetary units of an organization are called responsibility centers . Each Responsibility Centers 11 responsibility center is led by a manager who has the authority over and responsibility for the unit’s performance. 12 Click to edit Master title style Controlling Through Feedback 22-1 As time passes, the actual performance of an operation can be compared against the planned goals. This provides prompt 12 feedback to employees about their performance. If necessary, employees can use such feedback to adjust their activities in the future.
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6/11/2010 5 13 Click to edit Master title style Human behavior problems can arise if— 1. the budget goal is too tight and very hard for the employee to hi Human Behavior and Budgeting 22-1 13 achieve. 14 Click to edit Master title style Human behavior problems can arise if— 2. the budget goal is too loose and very easy for the employee to hi 22-1 14 achieve.
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Class 3a Lecture Notes SM10 - 6/11/2010 1 Click to edit...

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