Class #14 Notes
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This 4 page Class Notes was uploaded by Brandon Sangster on Monday October 26, 2015. The Class Notes belongs to Acc 204 at Pace University taught by Picheng Lee in Fall 2015. Since its upload, it has received 26 views. For similar materials see Financial Accounting in Business at Pace University.
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Date Created: 10/26/15
Brandon Sangster Class14 Notes Managerial Accounting Prof Picheng Lee Chapter 8 BudgetingProfit Planning Budget It is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period Budgeting Is the act of preparing a budget Budgetary Control Is the use of budgets to control an organizational activity Example Paying tuition for the fall or spring semester Cash In ow and Out ow Advantages of Budgets 0 Defining goals and objectives 0 Planning for the Future 0 Uncovering potential bottlenecks 0 Coordinate Activities Responsibility Accounting Managers should be held responsible for those items that the manager can control Test Tip To make this easier to remember just think of the original Spiderman movie when Uncle Ben told Peter With great power comes great responsibility Budget Period It s a Continuous budget that rolls forward one month into the next month year round Self Imposed Budgets Managers place this on themselves to reach a target goal for the company but if the goal is not reached the manager cannot place the blame on anyone else but him or herself Human Factors in Budgeting 0 Management must be enthusiastic and committed to the budgeting process 0 To not use budget to pressure employment 0 Managers are rewarded based on meeting budget targets Zero Based Budgeting Requires managers to justify all budget expenditures Most managers argue that zero based is too cost consuming to a company Standing Committee They are responsible for overall policy matters coordinating the budget Master Budge It is the central planning tool that a management team uses to direct the activities of a corporation Cash Crunch When you want to pay for something but don t have the financial funds to pay it Example Spring Break Vacation in Puerto Vallarta Sales Budget A budget showing the number of units sales price and total sales for each quarter or month Exercise 8 1 All on account Means only Credit sales not Cash Sales 1 Cash collections in 2nd quarter April 265000 May 336000 June 420000 Total 1021000 2 Accounts Receivable as of June 30th July 190000 August 20000 210000 This example can be found on Pg 373 in the Connect Textbook for practice and full questions