Managerial Accounting: Ch 20 Flashcards
master budget
collection of all budgets
4 reasons why a company would use budgeting
planning, coordination, communication, and benchmarking
master budgeting process
sales budget then production budget then DM, DL, and MOH budgets then budgeted cost of goods sold then operating expenses budget then capital expenditures budget then cash budget (receipts/disbursements) then budgeted income statement and budgeted balance sheet
sales budget =
number of unit sales x sales price per unit = total revenue
production budget =
units needed for sales + desired ending finished goods inventory = total units needed - units in beginning finished goods inventory = units to produce
direct materials budget =
quantity of DM needs for production (calculated as units to be produced x quantity of DM needed per unit) + desired DM ending inventory = total quantity of DM needed - DM beginning inventory = quantity of DM to purchase x cost per unit of DM = total cost of DM purchases
direct labor budget =
units to be produced x DL hours per unit = total DL hours required x DL cost per hour = total direct labor cost
Manufacturing overhead budget =
listing of budgeted overhead costs with separate sections for variable and fixed costs so that companies can better estimate changes in OH costs as production volume changes
budgeted cost of goods sold =
COGS = number of unit sales x manufacturing cost per unit (absorption costing)
manufacturing cost per unit = DM cost per unit + DL cost per unit + Variable MOH cost per unit + Fixed MOH cost per unit
operating expenses budget
listing of all budgeted operating expenses with separate sections for variable and fixed costs
capital expenditures budget (investing budget)
listing of all capital expenditure amounts with the name of the item purchased and the time of when the purchase occurs - reports the expected cash receipts and payments related to the sale and purchase of plant assets
cash budget (financing budget)
shows budgeted cash receipts and cash payments during the budget period
cash collections budget
shows the timing of when cash is received/collected for both cash and credit sales - sales on credit are not yet collected by the end of the period will be recorded as accounts receivable
cash payments budget
shows the timing of all cash payments made by a company for DM purchases, DL, MOH, operating expenses, capital expenditures, income taxes, dividends, and interest on loans
combined cash budget =
beginning cash balance + cash collections = total cash available - cash payments = ending cash balance before financing
Financing:
New borrowing - debt repayments = ending cash balance
budgeted income statement =
sales revenue - COGS = gross profit - operating expenses - interest expense - income tax expense = net income
budgeted balance sheet
shows budgeted amounts for assets, liabilities, and equity as of the end of budget period
total assets =
current assets + PPE (net)
liabilities =
current liabilities + long term liabilities = total liabilities + stockholders equity = total liability + stockholder equity
stockholders equity balance =
beginning of period stockholders equity + current period net income - current period dividends
sensitivity analysis
technique that shows the impact of the budget if an assumption changes - predictions that were used to make the budget will not be 100% accurate
service company master budget
no production, DM, or MOH budgets - includes sales, DL, operating expenses, capital expenditures, cash budget and budgeted financial statements (IS and BS)
