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Unformatted text preview: unreliable budgets greater when they are
9-11 Participative Budgeting
Can be time consuming
Can foster budgetary
“gaming” through budgetary
budgetary slack: Situation where managers intentionally un
underestimate budgeted revenues or
overestimate budgeted expenses so that
budget goals are easier to meet.
Budgeting Versus Long Range Planning
Three basic differences between Budgeting
and Long Range Planning:
Budgeting is short-term – usually one year.
Long range planning - at least five years. Chapter
9-13 The Master Budget
A set of interrelated budgets that constitutes a plan
of action for a specified time period.
Contains two classes of budgets: Operating budgets: Individual budgets that result in the preparation
of the budgeted income statement – establish
goals for sales and production personnel. Financial budgets: The capital expenditures budget, the cash
budget, and the budgeted balance sheet – focus
primarily on cash needs to fund operations and
capital expenditures. Chapter
The Master Budget - Components Chapter
9-15 Operating Budgets: Sales Budget
First budget prepared.
Derived from the sales forecast.
Management’s best estimate of sales revenue
for the budget period.
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- Winter '14