Chapter 8 Flashcards
control
process of setting standards, receiving feedback on actual performance, and taking corrective action to improve it
purposes of budgeting
forces managers to plan
it provides resource info that can be used to improve decision making
sets a benchmark to improve upon
improves communication and coordination
budget committee
responsible for reviewing the budget
master budget
comprehensive financial plan for the year made up of various individual departmental and activity budgets
operating budgets
concernd with the income generating activities of a firm
financial budgets
concerned with the inflows and outflows of cash and with financial position
sales budget
the projection of expected sales
production budget
describes how many units must be produced in order to meet sales needs and satisfy ending inventory requirements
units to be produces = unit sales +desired End Inv-beg inv
direct materials purchases budget
based on the amount of materials needed for production and the inventories of direct materials
purchases = expected usage + desired ending inventory DM - Beg inv DM
direct labor budget
shows the total direct labor hours and direct labor cost needed for the number of units in production budget
Overhead budget
shows the expected cost of all indirect manufacturing items
ending finished goods inventory
supplies info needed for the BS and serves as an input for the preparation of the COGS budget
COGS budget
cogs budget
marketing expense budget
outlines planned expenditures for selling and distribution activities
administrative expense budget
consists of estimated expenditures for the overall organization and operation of the company
