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Unformatted text preview: Budget Periods
1. May be prepared for any period of time. Most common is one year, supplemented with monthly & quarterly budgets
2. A continuous twelvemonth budget is where we drop the month just ended and add a future month, so we’re always looking ahead twelve months.
23-2 The Master Budget
The Master Budget
A set of interrelated budgets that constitutes a plan of action for a specified time period
Contains two classes of budgets:
Individual budgets that result in the preparation of the budgeted income statement – establish goals for sales and production personnel
The capital expenditures budget, the cash budget, and the budgeted balance sheet – focus primarily on cash needs to fund operations and capital expenditures
23-3 The Master Budget -- Components
The Master Budget Components Chapter
23-4 Operating Budgets: Sales Budget
Operating Budgets: Sales Budget
First budget prepared, WHY?
Derived from the sales forecast
Expected unit sales volume for each product
X anticipated unit selling price Operating Budgets: Production Budget
Operating Budgets: Production Budget
Shows units to be produced to meet expected sales
to meet expected sales
Derived from Sales Units budget plus the desired change in ending finished goods (ending finished goods less the beginning finished goods units)
Required production in units formula: Chapter
23-5 Operating Budgets: Direct Materials Budget
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This document was uploaded on 03/23/2014.
- Spring '14