Master Budgets I- Intro to Managerial Accounting- C6- Professor Savita Sahay
Introduction to Managerial Accounting Professor Savita Sahay Master Budgets (Chapter 6) Please visit our website at http://raw.rutgers.edu TIME STAMPS What is a Budget? 0:23 Advantages of Budgeting: 1:13 The Master Budget: 2:24 Components of Master Budget: 2:53 Sales Budget: 4:36 Practice Problem #1: 5:24 --- Preparation of a SALES budget --- Solution: 6:03 The Production Budget: 6:27 Practice Problem #2: 8:07 --- Preparation of a PRODUCTION budget --- Solution: 8:45 Practice Problem #3: 11:41 --- Sales, production, and cost of goods sold amounts to be reported on the budgeted income statement A budget is a detailed quantitative plan for a proposed course of action over a specified time period in the future. Operating budgets ordinarily cover a one year period corresponding to a company's fiscal year. Many companies divide their annual budget into four quarters (this is known as the budget period). The budgeting process involves planning and control. Planning involves developing objectives and preparing various budgets to achieve those objectives. Control involves investigating the deviations from the budgets and taking corrective actions for the future. The advantages of budgeting include converting the firm's strategy into short term goals to be achieved during the next year and helps define the company's goals and objectives. It helps promote coordination and communication among departments within the company and provides a framework for judging performance. It motivates managers and other employees and helps uncover potential bottlenecks early and find solutions. It is a means of allocating resources among divisions and helps manager and plan for cash requirements. The master budget consists of a set of operating budgets and a set of financial budgets that detail an organization's financial plans for a specific accounting period, generally a year. Operating budgets are plans used in daily operations and are the basis for financial budgets. Financial budgets, in turn, are projections of financial results for the accounting period. A sales budget is a detailed plan, expressed in both units and dollars, that identifies the product (or service) sales expected in an accounting period. It is prepared before any other budgets due to the importance of estimated sales volume, the fact that it will affect the level of operating activities and amount of resources needed for operations, the possibility that managers may use sales forecasts, and is the foundation that other budgets are developed upon. The production budget is a detailed plan showing the number of units a company must produce to meet budgeted sales and inventory levels. Production managers use this information to plan for the materials and human resources that production activities will require. To prepare a production budget, managers must know the budgeted number of sales (units) from the sales budget, and the desired level of ending finished goods inventory for each period in the budget year. To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
Introduction to Managerial Accounting Professor Savita Sahay Master Budgets (Chapter 6) Please visit our website at http://raw.rutgers.edu TIME STAMPS What is a Budget? 0:23 Advantages of Budgeting: 1:13 The Master Budget: 2:24 Components of Master Budget: 2:53 Sales Budget: 4:36 Practice Problem #1: 5:24 --- Preparation of a SALES budget --- Solution: 6:03 The Production Budget: 6:27 Practice Problem #2: 8:07 --- Preparation of a PRODUCTION budget --- Solution: 8:45 Practice Problem #3: 11:41 --- Sales, production, and cost of goods sold amounts to be reported on the budgeted income statement A budget is a detailed quantitative plan for a proposed course of action over a specified time period in the future. Operating budgets ordinarily cover a one year period corresponding to a company's fiscal year. Many companies divide their annual budget into four quarters (this is known as the budget period). The budgeting process involves planning and control. Planning involves developing objectives and preparing various budgets to achieve those objectives. Control involves investigating the deviations from the budgets and taking corrective actions for the future. The advantages of budgeting include converting the firm's strategy into short term goals to be achieved during the next year and helps define the company's goals and objectives. It helps promote coordination and communication among departments within the company and provides a framework for judging performance. It motivates managers and other employees and helps uncover potential bottlenecks early and find solutions. It is a means of allocating resources among divisions and helps manager and plan for cash requirements. The master budget consists of a set of operating budgets and a set of financial budgets that detail an organization's financial plans for a specific accounting period, generally a year. Operating budgets are plans used in daily operations and are the basis for financial budgets. Financial budgets, in turn, are projections of financial results for the accounting period. A sales budget is a detailed plan, expressed in both units and dollars, that identifies the product (or service) sales expected in an accounting period. It is prepared before any other budgets due to the importance of estimated sales volume, the fact that it will affect the level of operating activities and amount of resources needed for operations, the possibility that managers may use sales forecasts, and is the foundation that other budgets are developed upon. The production budget is a detailed plan showing the number of units a company must produce to meet budgeted sales and inventory levels. Production managers use this information to plan for the materials and human resources that production activities will require. To prepare a production budget, managers must know the budgeted number of sales (units) from the sales budget, and the desired level of ending finished goods inventory for each period in the budget year. To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html