Accounting chapter ten terms

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  1. Self Imposed budget
    A self-imposed budget or participative budget is a budget that is prepared with the full cooperation and participation of managers at all levels. It is a particularly useful approach if the budget will be used to evaluate managerial performance.
  2. Human Factors in budgeting
    1- Top managmenet must be enthusiastic

    2-Top management must not use the budget to pressure employees or blame them when something goes wrong. This breeds hostility and mistrust rather than cooperative and coordinated efforts.

    3-1.Highly achievable budget targets are usually preferred (rather than “stretch budget” targets) when managers are rewarded based on meeting budget targets.
  3. The Master Budget
    • The sales budget shows the expected sales for the budget period expressed in dollars and units. It is usually based on a company’s sales forecast. All other parts of the master budget are dependent on the sales budget.
    • The production budget is prepared after the sales budget. It lists the number of units that must be produced during each budget period to meet sales needs and to provide for the desired ending inventory.
    • The production budget in turn directly influences the direct materials, direct labor, and manufacturing overhead budgets, which in turn enable the preparation of the ending finished goods inventory budget.
    • These budgets are then combined with data from the sales budget and the selling and administrative expense budget to determine the cash budget. The cash budget is a detailed plan showing how cash resources will be acquired and used over a specified time period. All of the operating budgets have an impact on the cash budget.
    • The last step of the process is to prepare a budgeted income statement and a budgeted balance sheet.
  4. Sales Budget
    • Image Upload 1
    • The Sales Budget Includes
    • Budgeted sales in units
    • selling price per unit
    • Total budgeted sales
  5. Expected Cash Collections
    A sub part of the Sales budget, it includes how much account recievable the company is expecting to earn in that month as well as how much will be expected in the month followingImage Upload 2
  6. Production budget
    • After the Sales budget with the expected cash flows is complete you move on to the Production budget.Image Upload 3
    • It contains:
    • Budgeted sales
    • Add: desired ending inventory
    • Total needs
    • Less Beginning Inventory
    • Required production
  7. Direct Materials Budget
    • The Production budget is followed by the Materials Budget
    • Image Upload 4
    • It contains:
    • Production
    • Materials Per Unit
    • Production needs
    • Add: desired ending inventory
    • Total Needed
    • Less Beginning inventory
    • Materials to be purchased
  8. Direct Labor budget
    The Direct Labor budget is produced after the Direct Materials Budget

    • Image Upload 5
    • It Contains
    • Units of production
    • direct labor per unit
    • labor hours required
    • gauranteed labor hours
    • labor hours paid
    • Total Direct Labor Costs
  9. Manufacturing overhead budget
    • After the Direct Labor budget comes the Manufacturing overhead budget.
    • Image Upload 6
    • It contains
    • Budgeted Direct Labor hours
    • Variable manufacturing overhead rate
    • Variable manufacturing overhead costs
    • Fixed manufacturing overhead costs
    • Total Manufacturing overhead costs
    • Less : non cash costs
    • Cash dispercements for manufacturing overhead.
  10. Selling and administrative Expense Budget
    • After Manufacturing overhead budget is created you can then create the Selling and administrative Expense Budget.
    • Image Upload 7
    • It Contains:
    • Budgeted Sales
    • Variable S and A rate
    • Variable Expenses
    • Fixed S and A expenses
    • Total S and A expenses
    • Less : non cash Expenses
    • Cash S and A expenses
  11. Cash Budget
    • After Compeleting the Selling and administrative budget it is now time to make the Cash Budget
    • Image Upload 8
    • It Contains:
    • Begining cash balance
    • add: cash Collections
    • Total Cash Available
    • Less: Cash Disbursments
    • Materials
    • Direct Labor
    • Manufacturing overhead
    • Selling and Administrative
    • Equipment Purchase
    • Dividend
    • Total Disbursments
    • excess (deficiency)
    • Financing
    • Borrowing
    • Repayments
    • Interest
    • Total Financing
    • Ending Cash Balance
  12. Budgeted Income Statement
    • After you have completed the Cash Budget you can make the Budgeted income Statement.
    • Image Upload 9
    • It Contains:
    • Sales
    • Cost of Goods Sold
    • Gross Margin
    • Selling and Administrative expenses
    • Operating Income
    • Interest Expense
    • Net Income
  13. Budgeted Balance Sheet
    • After Completing the income staement you can now go and do the Budgeted Balance Sheet
    • Image Upload 10
    • It Contains:
    • Assets
    • -Cash
    • -Accounts recievable
    • -Raw Materials Inventory
    • -Finished goods inventory
    • -land
    • -equipment
    • Total Assets
    • Liabilities and Stockholders Equity
    • -accounts payable
    • -common stock
    • -retained earnings
    • Total Liabilities and Stockholders Equity
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Accounting chapter ten terms
Accounting chapter ten terms
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