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ACCT 102 Chapter 20 Budgets

ACCT 102 Chapter 20 Budgets - ACCT 102 Managerial...

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ACCT 102 – Managerial Accounting Chapter 20 – Master Budgets and Performance Planning Schmidt Purpose: The purpose of this handout is to summarize the budgeting concepts contained within the chapter. Ponder This : If you wanted to go across country to New York, how would you go about it? Very few of you would just hop in your car and head east. That’s because you would probably spend a lot more time getting there than if you were to look at your options, plan it out, and carefully follow the directions for getting to where you want to go. Think of budgeting as a financial set of driving directions. You decide where you want to go financially, and then set up a plan of attack to get you there in the quickest amount of time—kind of like driving to New York. The Budget Process – It’s quite involved and consists of various stages: Longer Term Strategic Plans are important. Those usually span 5 – 10 years. These usually set the long term direction of the company. Shorter Term Plans are more specific. Operating Budgets are generally shorter in nature and typically cover a year of time. ALL MANAGERS will be involved in some phase of the budgeting process. Benchmarking Budgets . Comparing results against “the norm” which includes past
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