Chapter6

Chapter6 - CHAPTER 6 Master Budgeting and Responsibility...

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CHAPTER 6 Master Budgeting and Responsibility Accounting
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Chapter Map 2
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What is Budget? The quantitative expression of a proposed plan of action by management for a specified period, and An aid to coordinating what needs to be done to implement that plan May include both financial and non-financial data 3
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Strategy, Planning and Budgets, Illustrated 4
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Advantages of Budgets Provides a framework for judging performance Motivates managers and other employees Promotes coordination and communication among subunits within the company 5
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Components of Master Budgets 6
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Components of Master Budgets Operating Budget – building blocks leading to the creation of the Budgeted Income Statement Financial Budget – building blocks based on the Operating Budget that lead to the creation of the Budgeted Balance Sheet and the Budgeted Statement of Cash Flows 7
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Develop Operating Budgets 8
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Before Moving On…… Review the product cost flow What’s this? What does this have to do with operating budgets? Try to structure the operating budgets by yourself before turning to the next slide. 9
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Sample Master Budget (Exhibit 6-2) 10
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Budget) Detailed schedule showing expected sales for the coming periods expressed in units and dollars. 11
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Chapter6 - CHAPTER 6 Master Budgeting and Responsibility...

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