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Anthony Burkhardt's Ch23-PowerPoint


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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 year 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. Chapter 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: Operating Budget: Individual budgets that result in the preparation of the budgeted income statement – establish goals for sales and production personnel Financial Budget: The capital expenditures budget, the cash budget, and the budgeted balance sheet – focus primarily on cash needs to fund operations and capital expenditures Chapter 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 Operating Bud...
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