10_Overheads - Objectives for today Types of budgets Operational budgets Three different roles of operational budgets Definitions Processes

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ACC 333 (Farrell), Fall 2011, Class 10 1 ACC 333 (Farrel ) Fal 2011, Class 10 1 Objectives for today Types of budgets Operational budgets – Three different roles of operational budgets • Definitions • Processes • Considerations when designing the processes – Conflicts across the different roles In-class activity ACC 333 (Farrel ) Fal 2011, Class 10 2 Types of budgets Strategic plans – Broad statement of firm’s objectives for markets, products, and pricing, and how to achieve those objectives Capital budgets – Long-term plans (up to 10 years) for major investment Financial budgets – Budgets of cash flow and balance sheet, usually for the upcoming year Operating budgets – Projected income statements and related nonfinancial measures for the next operating cycle (usually one year)
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ACC 333 (Farrell), Fall 2011, Class 10 2 ACC 333 (Farrel ) Fal 2011, Class 10 3 Major roles of operating budgets Planning (before) – Details of what management hopes to accomplish and how • Also a means to communicate those goals • Should reflect both current economic conditions and limitations due to current resources Motivation (during) – Coordinates actions of multiple individuals and groups – Encourages individuals to commit to a plan of action • Direction of action (i.e., take these actions as opposed to others) • Strength of effort (comes from linking plan to pay, promotion) Evaluation (after) – A standard of comparison for actual performance ACC 333 (Farrel ) Fal 2011, Class 10 4 Planning: Details of what management hopes to accomplish and how
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This note was uploaded on 03/19/2012 for the course ACCACC 333 taught by Professor Anne during the Fall '11 term at Miami University.

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10_Overheads - Objectives for today Types of budgets Operational budgets Three different roles of operational budgets Definitions Processes

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