acct b

a detailed quantitaive plan fr acquiring and using financial and other resources over a specified forthcoming time period

define goals and objectives, think about and plan for the future, means of allocating resources, unover potential bottlenecks, coordinate activities, communicate plans

1) Sales Budget 2) Production budget 3) direct materials 4) direct labor 5) MOH 6) ending finised goods 7)selling and administrating expenses 8) cash budget 9) income statement 10)balance sheet

• lists the number of units that must be produced to satisfy sales needs and to provide for the desired ending inventory
• Budgeted Unit sales + desired ending inventory (% of following qtr) = Total Needs - beg inventory (same as end inv of previous qtr) = Required Production

• details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories
• Raw Materials needed to meet production schedule +desired ending inv of raw materials = Total Raw materials needed - beg inv of raw materials = Raw materials to be purchased

• shows the direct labor-hours required to satisfy the production budget. By knowing in advance how much labor time will be needed throughout the budget year, the company can develop plans to adjust the labor force as the situation requires
• Units to be produced x DL time per unit (hr) = total DLH's needed x DL cost/hr = Tota DL cost

• lists all costs of production other than direct materials and direct labor
• Budgeted DLH's x Variable OH rate = total Variable OH + Fixed MOH = Total MOH - depreciation = cash needed (disbursement for MOH)

• The receipts section.
• The disbursements section.
• The cash excess or deficiency section
• The financing section

• Beg cash balance + receipts (collections from customers) = total cash avail. - disbursements (DM, DL, MOH, selling admin. , equip purch. , dividends) = Total disbursements (+,-) excess (deficiency of cash avail over disbursements)
• Financing: borrowing (at beg of qtr
• Repayments (end of year)
• Interest=
• End Cah balance

Managers should be held responsible for those items and only those item that the manager can actually control to a significant extent

• prepared for a single planned level of activity
• performance evaluation is difficult when actual activity differs from the planned level of activity

• may be prepared for any activity level in the revelant range
• show costs that should have been incurred at teh actual level of activity
• help managers control costs
• improve performance evaluation

occurs when actual revenue is greater than budgeted revenue

occurs when actual costs are greater than budgeted costs

(AQ x AP) - ( AQ x SP)

(AQ x SP) - (SQ x SP)

AQ ( AP - SP)

SP (AQ - SQ)

Budgeted x quantity = revenue - expenses = NOI

• goes between Planning and Flexible budged
• Revenue + Spending Variance = between Flexible and Actual Budget