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    17 views4 pages

    5 6102855456227590210 PDF

    Uploaded by

    Jenelle Acedillo Reyes

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 4
    3) ReSQ. lhe Kevrew Shoot of Gocountoney + Momagemeet Advrsory Fevrvens MAS-05: BUDGETING BUDGET - 1s a detailed plan, expressed in quantitative terms, about business operations for a specific period; a budget is @ usetul too! for planning and controlling company expenses, cash flows and earnings The term budgeting 1s used to denote the process of coming Up with budgets. ADVANTAGES & LIMITATIONS OF BUDGETING Uses/Advantages of Budgeting Lmitations of Budgeting + It forces managers to plan for the future + Considerable time and costs are required + It provides a means of communicating + Budgets are merely estimates that require management's plans throughout the entity, judgment and might be modified or revised if + Idirects the activities toward the necessary. achievement of organizational goals, + Asuccessful budgetary system requires + Itcoordinates the activities of the entire cooperation of all members of the entity by integrating plans of various parts. ‘organization. + It provides a means of allocating resources, + Budgets sometimes restrict the flexibility of to segments efficiently and effectively. the decision making process. + Itdefines goats that serve as benchmarks for + ‘The budget program Is merely a guide, not evaluating subsequent performance. substitute for good management ability. ‘THE MASTER BUDGET MASTER BUDGET is a comprehensive budget that consolidates the overall plan of the organization for a specified period. The master budget is mainly composed of: (1) operating budgets and (2) financial budgets. The master budget, in some organizations, (s also referred to as ‘pro forma budget, planning budget, forecast budget, master profit plan. MASTER BUD eet OPERATING BUDGET FINANCIAL BUDGET Sales budget ‘Cash budget Production budget Budgeted balance sheet Direct materials budget Budgeted cash flow statement Direct labor budget Capital expenditure budget Factory overhead budget Working capital budget Budgeted cost of goods sold Budgeted operating expenses Budgeted net income Budgeted income statement TERMINOLOGIES USED IN BUDGETING FIXED BUDGET ‘A budget prepared for a one level of activity within a certain penod. (other term: static budget) FLEXIBLE BUDGET —_ A budget prepared for different levels of activity within a certain period. (other terms: variable budget, sliding scale budget) CONTINUOUS ‘A 12-month budget that rolts forward one month as the current month 1s BUDGET completed (other term: perpetual budget) ZERO-BASED ‘A method of budgeting in which managers are required to justify all costs as BUDGETING the programs involved were being proposed for the first time IMPOSED ‘A process wherein budgets are prepared by top management with little or no BUDGETING inputs from operating personnel PARTICIPATORY A process wherein budgets are developed through joint decisions by top BUDGETING management and operating personne! BUDGET COMMITTEE A group of key management person responsible for over-all policy matters relating to the budget program and for coordinating the budget preparation BUDGET MANUAL —_This describes how a budget is prepared and includes a planning calendar and distribution instructions for all budget schedules, Page 1 of 4 pages RSM. The Review School of licconrtuncy MAS-05 BUDGETING EXERCISES: BUDGELING 1. Kingsman Company has budgeted sales at P 100,000 and expects a profit of 10% of the sales. Expenses are estimated as follows: selling = 10% of sales; administrative = 15% of sales. Labor is expected to be 40% of the total manufacturing costs. Factory overhead is to be applied at 75% of direct labor costs. Inventories are to be as follows: Janwary 1 December 31 Materials P 3,000 500 Work-in-orocess 2,500 5,000 Finished gcods 3,006 8,000 REQUIRED: Determine the following: 1. Cost of goods sold Factory overhead 2. Total manufacturing cost Materials purchases (Adapted: AICPA) 2. Past collections experienced by Eggsy Company indicate that 60% of the net sales billed in @ month are collected during the month of sales, 30% are collected in the following month, and 10% are collected in the second following month. record of monthly ret sales of previous months is as follows: zoe | Noveinb ise5] March |? 500,000 O18 [december | 460.9501 55,5 [_Apni_| P 550,000 3019 [January —[P'a89,000! May | P 600,000 February | P.420,000 | June] P700,000 ‘On January 1, 2019, the accounts receivabie balance showed P 229,000. REQUIRED: Determine the following: ‘* Cash collections on accounts receivable during: 1. January 2019 2. March 2019 3. May 2019 ‘+ Accounts receivable balance at the end of: 4. February 2019 5. Aprit 2019 6. June 2019 (Adapted: AICPA) ‘SOLUTION GUIDE of 2019 Monthly Collections ebruary [March ‘April ‘May June Months | Net Sales | November | P 450,000 December_|_P-460,000 January | P.480,000 | February | P 420,000 March | P500,000_| April __|-P550,00 [ May P 600,00 [June | P-700,000 7 inane TOTAL collections Ei iee ae “J Analysis Schedule of 2019 Monthly Accounts Receivable January [February] March | April May June} AR, beginning T 1 + Net Sales P 480,000 420,060} P 500,000 P 550,000 600,000 700,000 = Collections c de be tc be md _) AR, ending eel a a ee 3, The sales manager of Merling Merchanaising h1s budgeted the following sales for the 2% quarter of 2019 ‘Apri! P 123,500 May 156,000 jwne 208,000 Other budgeted estimates are:

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