The accuracy of the sales forecast strongly affects the soundness of the entire master budget.Ĭomputing Units to be Produced Expected unit sales + Units, ending inventory – Units, beginning inventory Units to be produced = Research and development budget 10.Ědministrative expense budget 11.ěudgeted income statement Overhead budget 6.Ğnding finished goods inventory budget 7.Ĝost of goods sold budget 8. Production budget 3.ĝirect materials purchases budget 4.ĝirect labor budget 5. How is the budget used to implement the organization’s plan? It improves communication and coordination. It provides a standard for performance evaluation. It provides resource information that can be used to improve decision making. Planning: Strategic Plan Long-Term Objectives F e edba ck Control: Short-Term Objectives Compare actual results with planned amounts Budgets Operations Production, Service, and Sales The Master Budget and Its Interrelationships After studying this chapter, you should be able to: 4.ĝescribe the budgets for merchandise and service firms. Identify the components of the financial budget, and prepare a cash budget. Prepare the operating budget, identify its major components, and explain the interrelationships of the various components. Objectives 1.ĝefine budgeting, and discuss its role in planning, controlling, and decision making. Budgeting for Planning and Control Prepared by Douglas Cloud Pepperdine University
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