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Managerial Accounting

by: Morris Beer II

Managerial Accounting ACCT 2301

Marketplace > Texas Tech University > Accounting > ACCT 2301 > Managerial Accounting
Morris Beer II
GPA 3.94


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Class Notes
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This 12 page Class Notes was uploaded by Morris Beer II on Thursday October 22, 2015. The Class Notes belongs to ACCT 2301 at Texas Tech University taught by Bigbee in Fall. Since its upload, it has received 10 views. For similar materials see /class/226438/acct-2301-texas-tech-university in Accounting at Texas Tech University.


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Date Created: 10/22/15
Chapter Seven Planning for Profit and Cost Control Three Levels of Planning Strategic planning involves making longterm decisions such as definin the scope of the usiness determining which products to develop or discounting and identifying the most profitable markets Capital lbijclgetirng focuses on intermediate range planning and involves decisions as whether to buy or lease equipment whether to stimulate sales or whether to increase company assets Master budget describes shortterm objectives in specific sales targets roduction goals and financing plans Advantages of Budgeting Promotes Coordination Promotes Planning I Budgeting Enhances Enhances Performance Corrective Measurement Actions Budgeting and Human Behavior Upper management must be sensitive to the impact of the budgeting process on employees Budgets are Many people find constraining They evaluation based on Jir 31 individual budget expectations 39reedom in favor of stressful Think of an esta39oJis39ned plan students and exams Upper management must demonstrate that budgets are sincere efforts to express realistic goals employees are expected to meet Cash Receipts and Payments Schedules Cash receipts Cash Payments for inventory Cash Payments for S 8 A gangs U P 39G v ew Pro forma Financial Statements vaawmgm Er C lh3 Sales Budget Detailed schedule prepared by the marketing department showing expected sales for the coming periods and expected collections on those sales It is critical to the success of the entire budgeting process Inventory Purchases Budget The total amount of inventory needed for each month is equal to the amount of the cost of budgeted sales plus the desired ending inventory Cost of budgeted sales XXX Plus Desired ending inventory XXX Total inventory needed XXX Less Beginning inventory XXX Amount to purchase XXX Selling and Administrative Expense Budget Check Yourself rm d ewv ng Mitian s a n in mantra n mm in Enema n nitemmmg imam anmn pf h warm reptoy erd n pip new Depreciation Expense is a noncash charge to income and will not appear 5 on the Statement of Cash Flows m0 Pro Forma Income Statement The pro forma income statement gives management an estimate of the expected profitability of HH If the project appears to be unprofitable management can make the decision to abandon it Although managers remain responsible for data analysis and decision making computer technology offers powerful tools to asset in those tasks Pro Forma Statement of Cash Flows Almost all the information for the Pro Forma Statement of Cash Flows can be found on the Cash Budget End of Chapter Seven


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