Ch 8 Flashcards
Planning
Developing goals and preparing various budgets
To achieve those goals
Budget
Detailed plan for future that is usually
expressed in quantitative terms
Control
Gathering feedback to ensure the plan is being
Properly executed or modified as circumstances change
Responsibility accounting
Manager should be held responsible for those items
And only items he can actually control
Continuous AKA Perpetual budget
1 month or quarter is added to the end of the budget
as each month or quarter comes to a close
Self-imposed AKA Participative budget
Budget prepared with full cooperation and participation
Of managers at all levels
Budget committee
Responsible for overall policy relating to budget
Program and for coordinating preparation of budget itself
Master budget, how does it culminate?
Consists of a number of separate but interdependent
Budgets that formally layout company’s sales, production
And financial goals
Culminates in a cash budget, budgeted income statement
And budgeted balance sheet
Sales budget
First step of budgeting process
Detailed schedule showing expected sales for budget period
Cash budget
Detailed plan showing how cash resources will be
Acquired and used
Production budget
Prepared after sales budget
Lists number of units that must be produced to satisfy sales
Needs and to provide for desired ending inventory
Merchandise purchases budget
Shows amount of goods purchased from suppliers
During period
Direct materials budget
Details raw material that must be purchased to fulfill
Production budget and provide adequate inventories
Direct labor budget
Shows direct labor hours required to satisfy
The production budget
Manufacturing overhead budget
Lists all costs of production other than direct materials
And direct labor
