BEC Strategic Planning

  1. What makes up a Master Budget
    • 1. Operating Budget:
    • 2. Finanical Budget:
    • 3. Capital Expenditure Budget:
  2. Sequence of Budget preparation
    • Sales budget
    • Production Budget
    • Budget of other expense and revenue
    • pro forma Financial statement
  3. Forecasting Tools/Methods
    • Quantitative Models:
    • REGRESSION ANALYSIS: Linear regression is a method for studying the relationship between a dependent variable and one or more independent variables. Y=A+bx

    Probability Theory: Helps Deal with Uncertainty.

    • Coeefficient of Correlation: measures relationship between 1 dependend and 1 independent variable. 
    • + if variable moving in the same direction
    • - if moving in different
    • 0 if scattered

    Exponential Smoothing: Perdicts sales based on historical amounts. used to prepare annual profit plan 

    • Judgement Model:
    • Delphi: Relies on judgement through questionaires.
  4. Types of cost
    • Explicit Costs
    • Explicit costs are documented out-of-pocket expenses (e.g., wages, materials, and Utilities). 
    • Implicit Costs (Includes Opportunity Costs)
    • Implicit costs are opportunity costs of inputs
    • supplied by the owners (entrepreneurship,
    • equity, capital, etc.).

    • a. Opportunity Cost Definition- Opportunity
    • cost represents the value of the next best
    • alternative foregone (or not chosen).

    • b. Opportunity Cost Measurement -Opportunity cost is usually considered to be
    • the profits that are lost from business because one strategy is pursued
    • instead of another.

    • c. Items with not alternative use have no opportunity vc.
    • ost
Card Set
BEC Strategic Planning
Chapter 6 of Bisk