Professional Documents
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TM03 04 - Akman - Planningctrl Budgeting GJL 23 24
TM03 04 - Akman - Planningctrl Budgeting GJL 23 24
Setting Organizational
Objectives
Identifying Opportunities
and/or Problems
Selecting Course of
Action and Allocating
Resources
Evaluating Accomplishments
of Organizational
Objectives
Purposes of Budgeting Systems
Planning
Budget
Facilitating
a detailed plan,
Communication and
expressed in
Coordination
quantitative terms,
that specifies how Allocating Resources
resources will be Controlling Profit and
acquired and used Operations
during a specified Evaluating Performance
period of time. and Providing Incentives
Advantages of Budgets
Compels managers
to think ahead
Continuous Budget
Strategic Plan
Continuous or
Rolling Budget
1999 2000 2001 2002
Long-range plans…
are coordinated with capital budgets,
which detail the planned expenditures
for facilities, equipment, new products,
and other long-term investments.
Master Budget (anggaran induk)
Sales
Rencana keuangan
yang komprehensif
utk keseluruhan
Production
organisasi yang
terdiri atas berbagai Distribution
anggaran
individual.
Finance
Main Components of Master Budget….
Sales Budget
Purchases Budget
Operating Selling and
Budgets Cost of Goods Administrative
Sold Budget Expense Budget
Budgeted
Income Statement
Budgeted
Cash Budget
Financial Balance Sheet
Budgets
Capital
Expenditures Budget
Preparation of a Master Budget for a Service
Organization
Service Revenue
Budgeted
Income Statement
Budgeted
Cash Budget Balance
Financial Sheet
Budgets
Capital
Expenditures Budget
Components of Master Budget
Inventory
Budget
____ ____
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Resources Resources
Activity-Based
Costing (ABC)
Activities Activities
Activity-Based
Cost objects: Budgeting (ABB)
Forecast of products
products and services and services to be
produced, and produced and
customers served. customers served.
Budgeting and the Management Cycle
•Relate the organization’s long-term
goals to its short-term activities
•Distribute resources and workloads
•Communicate responsibilities
•Select performance measures
•Set goals for bonuses and rewards
Distribution
Preliminary
and customer
design.
service.
Detailed design
Production.
and testing.
Participative Budgeting
Top Management
Middle Middle
Management Management
Production
Budget
Master
Budget
Covering all
phases of
a company’s
operations.
Sales Budget
Breakers, Inc. is preparing budgets for the
quarter ending June 30.
Budgeted sales for the next five months are:
April 20,000 units
May 50,000 units
June 30,000 units
July 25,000 units
August 15,000 units.
The selling price is $10 per unit.
Sales Budget
April May June Quarter
Budgeted
sales (units) 20,000 50,000 30,000 100,000
Selling price
per unit $ 10 $ 10 $ 10 $ 10
Total
Revenue $200,000 $500,000 $300,000 $ 1,000,000
Production Budget
Production Budget
Sales Production
Budget Budget
Production Budget
budget.
Production Budget
April May June Quarter
Sales in units 20,000
Add: desired
end. inventory
Total needed
Less: beg.
inventory
Units to be
started
From sales
budget
Production Budget
April May June Quarter
Sales in units 20,000
Add: desired May sales 50,000 units
end. inventory 10,000 Desired percent 20%
Total needed 30,000 Desired inventory 10,000 units
Less: beg.
inventory
Units to be
started
Production Budget
April May June Quarter
Sales in units 20,000
Add: desired
end. inventory 10,000
Total needed 30,000
Less: beg.
inventory 4,000
Units to be
started 26,000
March 31
ending inventory
Production Budget
April May June Quarter
Sales in units 20,000 50,000
Add: desired
end. inventory 10,000 6,000
Total needed 30,000 56,000
Less: beg.
inventory 4,000 10,000
Units to be
started 26,000 46,000
Production Budget
April May June Quarter
Sales in units 20,000 50,000 30,000 100,000
Add: desired
end. inventory 10,000 6,000 5,000 5,000
Total needed 30,000 56,000 35,000 105,000
Less: beg.
inventory 4,000 10,000 6,000 4,000
Units to be
started 26,000 46,000 29,000 101,000
Direct-Material Budget
• At Breakers, five pounds of material are
required per unit of product.
• Management wants materials on hand at the
end of each month equal to 10% of the
following month’s production.
• On March 31, 13,000 pounds of material are
on hand. Material cost $0.40 per pound.
From our
production
budget
Direct-Material Budget
April May June Quarter
Production in units 26,000 46,000
Materials per unit 5 5
Production needs 130,000 230,000
Add: desired
ending inventory 23,000
Total needed 153,000
Less: beginning
inventory
Materials to be
purchased
March 31
inventory
Direct-Material Budget
April May June Quarter
Production in units 26,000 46,000 29,000 101,000
Materials per unit 5 5 5 5
Production needs 130,000 230,000 145,000 505,000
Add: desired
ending inventory 23,000 14,500 11,500 11,500
Total needed 153,000 244,500 156,500 516,500
Less: beginning
inventory 13,000 23,000 14,500 13,000
Materials to be
purchased 140,000 221,500 142,000 503,500
Direct-Material Budget
July Production
Sales in units April 25,000 May June Quarter
Add:Production in units
desired ending 26,000 3,000 46,000
inventory 29,000 101,000
TotalMaterials
units needed
per unit 5 28,000 5 5 5
Less: beginning inventory
Production needs 130,000 5,000 230,000 145,000 505,000
Production in units 23,000
Add: desired
ending inventory 23,000 14,500 11,500 11,500
Total needed 153,000 244,500 156,500 516,500
Less: beginning
inventory June Ending Inventory
13,000 23,000 14,500 13,000
July
Materials toproduction
be in units 23,000
Materials per unit
purchased 140,000 221,500 5142,000 503,500
Total units needed 115,000
Inventory percentage 10%
June desired ending inventory 11,500
Direct-Labor Budget
• At Breakers, each unit of product requires 0.1 hours of
direct labor.
• The Company has a ”no layoff” policy so all employees
will be paid for 40 hours of work each week.
• In exchange for the ”no layoff” policy, workers agreed to
a wage rate of $8 per hour regardless of the hours
worked (No overtime pay).
• For the next three months, the direct labor workforce will
be paid for a minimum of 3,000 hours per month.
Let’s prepare the direct labor budget.
Direct-Labor Budget
April May June Quarter
Production in units 26,000 46,000 29,000 101,000
Direct labor hours
Labor hours required
Guaranteed labor
hours
Labor hours paid
Wage rate
Total direct labot cost
From our
production
budget
Direct-Labor Budget
April May June Quarter
Production in units 26,000 46,000 29,000 101,000
Direct labor hours 0.10 0.10 0.10 0.10
Labor hours required 2,600 4,600 2,900 10,100
Guaranteed labor
hours
Labor hours paid
Wage rate
Total direct labot cost
Direct-Labor Budget
April May June Quarter
Production in units 26,000 46,000 29,000 101,000
Direct labor hours 0.10 0.10 0.10 0.10
Labor hours required 2,600 4,600 2,900 10,100
Guaranteed labor
hours 3,000 3,000 3,000
Labor hours paid 3,000 4,600 3,000 10,600
Wage rate
Total direct labot cost
Total DLH Q2
Overhead Budget
Here is Breakers’ Overhead Budget for the
April
quarter.
May June Quarter
Total MOH Q2
Selling and Administrative
Expense Budget
• At Breakers, variable selling and
administrative expenses are $0.50 per unit
sold.
• Fixed selling and administrative expenses
are $70,000 per month.
• The $70,000 fixed expenses include
$10,000 in depreciation expense that does
not require a cash outflows for the month.
Selling and Administrative
Expense Budget
April May June Quarter
Sales in units 20,000 50,000 30,000 100,000
Variable S&A rate
Variable expense
Fixed S&A
expense
Total expense
Less: noncash
expenses
Cash
disbursements
From our
Sales budget
Selling and Administrative
Expense Budget
April May June Quarter
Sales in units 20,000 50,000 30,000 100,000
Variable S&A rate $ 0.50 $ 0.50 $ 0.50 $ 0.50
Variable expense $ 10,000 $ 25,000 $ 15,000 $ 50,000
Fixed S&A
expense 70,000 70,000 70,000 210,000
Total expense 80,000 95,000 85,000 260,000
Less: noncash
expenses
Cash
disbursements
Selling and Administrative
Expense Budget
April May June Quarter
Sales in units 20,000 50,000 30,000 100,000
Variable S&A rate $ 0.50 $ 0.50 $ 0.50 $ 0.50
Variable expense $ 10,000 $ 25,000 $ 15,000 $ 50,000
Fixed S&A
expense 70,000 70,000 70,000 210,000
Total expense 80,000 95,000 85,000 260,000
Less: noncash
expenses 10,000 10,000 10,000 30,000
Cash
disbursements $ 70,000 $ 85,000 $ 75,000 $ 230,000
Cash Receipts Budget
*rounded
Budgeted Income Statement
Breakers, Inc.
Budgeted Income Statement
For the Three Months Ended June 30
Revenue (100,000 × $10) $ 1,000,000
Cost of goods sold (100,000 × $4.60) 460,000
Gross margin 540,000
Operating expenses:
Selling and admin. Expenses $ 260,000
Interest expense 838
Total operating expenses 260,838
Net income $ 279,162
Budgeted Balance Sheet
• Estimated sales:
– Drills 60,000 at $100 each
– Saws 40,000 at $125 each
• Predicted inventories:
Beginning Ending
– Drills, finished 20,000 25,000
– Saws, finished 8,000 10,000
– Metal, direct materials 32,000 lbs 36,000 lbs
– Plastic, direct masterials 29,000 lbs 32,000 lbs
– Handle, direct materials 6,000 each 7,000 each
Manufacturing requirements :
Direct Materials Direct Labor
Drills Metal, 5 lbs. at $8 per lb. 2 hours at $12 per hour
Plastic, 3 lbs. at $5 per lb.
Handles, 1 each at $3
Saws Metal, 4 lbs. at $8 per lb. 3 hours at $16 per hour
Plastic, 3 lbs. at $5 per lb.
Variable manufacturing overhead is applied at the rate of $1.50 per direct labor hour for each product.
Fixed manufacturing overhead is $214,000 per quarter, including noncash expenditures of $156,000,
and is allocated on total units completed.
Financial information:
– Beginning cash balance is $1,800,000
– Purchases of direct materials and labor are paid for in quarter acquired
– Overhead costs are paid each quarter
– Sales are on credit and are collected 50% in current period and the remainder the
next period. Last quarter’s sales were $8,400,000. There are no bad debts.
– Selling and administrative expenses are paid quarterly and total $340,000 including
$90,000 of depreciation
– All unit cots for the first quarter of 2022 are the same as they were for the first
quarter of 2021.
required:
For the first quarter of 2022, prepare:
1. Sales budget in dollars
2. Production budget in units
3. Purchases budget
4. Manufacturing disbursements budget
5. Cash budget
6. Budgeted income statement using the functional format (Hirzt: First
determine the manufacturing costs per unit for drill and saw. These include
direct materials, direct labor, variable manufacturing overhead, and the
average fixed manufacturing overhead per unit completed)
Yeah…it’s good.
It’s delicious How they manage
ice cream… this mart?
Operating Budget
for a Merchandising Company
• Estimated sales :
– Blue cheese 160,000 hoops at $10 each
– Ice cream 240,000 gallons at $5 each
• Desired inventories :
Beginning Ending
– Blue cheese 10,000 12,000
– Ice cream 4,000 5,000
• Estimated costs :
– Blue cheese $8 per hoop
– Ice cream $2 per gallon
Financial information :