Professional Documents
Culture Documents
Budgetary Planning and Control
Budgetary Planning and Control
1. Planning
2. Control
1. Planning
The master
budget
coordinates the
organization’s
activities.
A. A Formal Summary of
Company Plans
It sets specific targets
for sales, production,
selling and admin.,
and capital
acquisitions.
It culminates a
budgeted income
statement, balance
sheet, and cash receipt
and disbursement
summary.
III. Selected Budget Formats
A. Sales Budget
B. Production Budget
C. Direct Materials Budget
D. Direct Labor Budget
E. Overhead Budget
F. Cash Receipts and Disbursements Budget
A. Sales Budget
Projected sales
x Selling price per unit
= Budgeted sales revenue
B. Production Budget
Units to be produced
x Variable costs per unit
= Total variable overhead
+ Budgeted fixed overhead
= Total budgeted overhead
- Noncash expenses
= Cash disbursements for overhead
F. Cash Receipts and Disbursements
Budget
Cash receipts
- Cash disbursements
= Excess (deficiency) of cash
available over disbursements
+ Beginning cash balance
= Ending cash balance
IV. Static v. Flexible Budget
A. Static Budget
B. Static Budget Illustration
C. Flexible Budget
D. Flexible Budget Illustration
A. Static Budget
Why are
A budget designed for
we so
off from only one level of
budget? activity. Differences
from the budget can be
misleading when an
organization actually
operates at a different
level of activity.
B. Static Budget Illustration
Standard
cost per Original
unit Actual Budget Variance
Units produced and sold 8,000 10,000 2,000 U
A budget designed to
cover a range of
activity. Can be used
to compare actual
costs incurred to
budgeted costs around
that level of activity.
D. Flexible Budget Illustration
Standard
cost per unit Units
Units produced and sold 5,000 10,000 15,000