Accounting Chapter 8 Notes
Accounting Chapter 8 Notes ACC 204
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This 5 page Class Notes was uploaded by Melanie Guerrero on Sunday April 24, 2016. The Class Notes belongs to ACC 204 at Pace University taught by James Hannon in Spring 2016. Since its upload, it has received 7 views. For similar materials see Managerial Accounting (20014) in Accounting at Pace University.
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Date Created: 04/24/16
Accounting Chapter 8 Notes Master Budgeting • Budget – detailed plan for the future that is usually expressed in formal quantitative terms • Budgets are used for – planning and control • Planning – involves developing goals and preparing various budgets to achieve those goals • Control – involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change Responsibility Accounting • That a manager should be held responsible for only those items that the manager can actually control to a significant extent Choosing a Budget Period • Continuous or perpetual budget – a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed Self-Imposed Budget • Self-imposed or participative budget – a budget that is prepared with the full cooperation and participation of managers at all levels Master Budget • Consists of a number of separate but interdependent budgets that formally lay out the company’s sales, production, and financial goals 1. Sales Budget – a detailed schedule showing expected sales expressed in both dollars and units 2. Production budget – produced after the sales budget, lists the number of units that must be produced to satisfy sales needs and to provide for the desired ending finished goods inventory 3. Direct materials budget – produced next, details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories 4. Direct labor budget – shows the direct labor hours required to satisfy the production budget 5. Manufacturing overhead budget – lists all costs of production other than direct materials and direct labor 6. Ending finished goods inventory budget – shows the dollar amount of unsold finished goods inventory that will appear on the ending balance sheet 7. Selling and administrative expense budget – lists the budgeted expenses for areas other than manufacturing 8. Cash budget – a detailed plan showing how cash resources will be acquired and used over a specific time period Has 4 major sections: 1. The receipts section 2. The disbursements section 3. The cash excess or deficiency section 4. The financing section Budgeted Income Statement Budgeted Balance Sheet
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