MAHM8e Chapter08.Ab.az

8/16/2019 MAHM8e Chapter08.Ab.az

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PowerPointPowerPoint Presentation byPresentation by

Gail B. WrightGail B. WrightProfessor Emeritus of AccountingProfessor Emeritus of Accounting

Bryant UniversityBryant University

© Copyright !!" #homson $outh%Western& a part of #he

#homson Corporation. #homson& the $tar 'ogo& an(

$outh%Western are tra(emar)s use( herein un(er license.

MANAGEMENT

ACCOUNTING

8th EDITION

BY

HANSEN & MOWEN

* BU+GE#,-G /0 P'A--,-G 1 C/-#0/'

STUDENT EDITION


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1. Discuss budgeting & its role in planning,

control, & decision making.

2. Define & prepare a master budget, identifyits major components, & outline the

interrelationships of its various

components.

LEARNING OBJECTIVES

Continued


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3. Describe fleible budgeting, & list the

features that a budgetary system should

have to encourage managers to engage ingoal!congruent behavior .

". #plain ho$ activity!based budgeting

$orks.

LEARNING OBJECTIVES


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P'A--,-G2 +efinition

%ooking ahead to see $hat

actions should be taken to realie

particular goals.

%' 1


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C/-#0/'2 +efinition

%ooking backward, determining$hat actually happened &

comparing it $ith previously

planned outcomes.

%' 1


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(here do budgets fit into

planning & control)

Budget are financial plans for

the future, identifying objectives

& the actions needed to achievethem.

%' 1


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A+3A-#AGE$ /

BU+GE#,-G* budgetary system provides the follo$ing

advantages+

orces managers to plan-rovides information that can be used to

improve decision making

-rovides a standard for performance evaluationmproves communication & coordination

%' 1

!"#r$%e dec!!$ "ak!g


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4A$#E0 BU+GE#2 +efinition

Comprehensive financial plan

for organiation as a $hole.

%' 2


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(hat is a /continuous0

budget)

* c$t!u$u budget is a

moving 12!month budget,

adding a month as eachmonth epires.

%' 2

"$%!g '()"$th budget


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4A$#E0 BU+GE#$2 4a5orComponents

'perating budget

Describes income generating activities of a firm

inancial budgetsDetail inflo$s & outflo$s of cash

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*!ac!a+

O#erat!g


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/PE0A#,-G BU+GE#$2 $tepsin the Process

1. ales budget

2. -roduction budget

3. Direct materials purchases budget". Direct labor budget

. 'verhead budget

. elling & administrative budget4. #nding finished goods inventory budget

5. Cost of goods sold budget

%' 2


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/04U'A$2 Pro(uction Units

Except for JIT systems, production budgets

must meet sales needs & satisfy ending

inventory requirements.

%' 2

U!t t$ be #r$duced ,

E-#ected u!t a+e .

U!t ! ed!g !%et$r/ 0

U!t ! beg!!g !%et$r/


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#E6A$ 0E6& ,-C.2 +irect 4aterials

6eas 7e, nc., purchases ( direct

materials 8D9: for production ofits 6eas 7e 6!shirts+ plain 6!shirts

& ink to produce the dinosaur logo.

6eas 7e, nc., purchases ( direct

materials 8D9: for production ofits 6eas 7e 6!shirts+ plain 6!shirts

& ink to produce the dinosaur logo.

%' 2


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/04U'A$2 Purchases

Direct materials purchases budget tells

amount & cost of ra materials purchased in

each period.

%' 2

D!rect "ater!a+ 1DM2 #urchaed ,

DM eeded 3$r #r$duct!$ .

DM de!red ! ed!g !%et$r/ 0

DM ! beg!!g !%et$r/


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;o$ do $e determine the

cost of finished goodsending inventory)


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;o$ do $e project income

from the operating budgets)

#stimate selling &

administrative epenses, then

transfer all information into projected income statement.

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,-A-C,A' BU+GE#$

1. Cash budget

2. >udgeted balance sheet

3. >udget for capital ependitures

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%' 2


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(hat is the purpose of the

cash budget)

Cah budget document the

need for cash & the ability to

repay debt.

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%' 2


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/04U'A2 Cash Bu(get

!ro"ecting the ending cash balance includes

cash collections, payments, & borroings &

includes minimum cash needed.

%' 2

Ed!g cah ba+ace ,

Beg!!g ba+ace .

1cah rece!#t 0 d!bure"et2 .

1cah b$rr$w!g 0 re#a/"et2

%' 3


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(hy are static budgets not

good for performanceevaluation)

*ctual level of activity may

differ from the static budget

level & misrepresent performance.

%' 3

Actua+ +e%e+ $3 act!%!t/ "a/

%' 3


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'E6,B'E BU+GE#2 +efinition

* budget for epected costs of

a range of activity levels.

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%' 3


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;o$ are budgets related to

performance evaluation)

>onuses, salary increases,

promotions are based on

achieving or beating budgettargets.

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(hat is participative

budgeting)

-articipative budgeting

involves subordinate

managers in setting budgettargets to achieve goal

congruence.

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%' 3


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C/-#0/''AB'E C/$#$2

+efinition

*re costs $hose level a

manager can influence

%' 3

%' "


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AC#,3,#7%BA$E+ BU+GE#,-G

*ctivity!based budgeting fits *>C &

*>9 systems. >udgets are

developed for company activities to

sho$ the resources consumed. Can

be done as a fleible budget.

*ctivity!based budgeting fits *>C &

*>9 systems. >udgets are

developed for company activities to

sho$ the resources consumed. Can

be done as a fleible budget.

%' "

%' "


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AC#,3,#7 'E6,B'E BU+GE#

%' "

E 6 8 , B

, #

E 6 8 , B

, # * % 9 !

* % 9 !

>udget can be

developed based on

different activity

drivers.

%' "


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'E6,B'E PE0/04A-CE

0EP/0#

%' "

E68,B,#E68,B,# *%99*%99

-erformance report

provides more

relevant information

$hen several activity

drivers are used.


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THE ENDTHE END

CHA4TE5 8

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MAHM8e Chapter08.Ab.az

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