LESSON 2:

BUDGET
PREPARATION
 OBJECTIVES:

A B C D
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.
PRE-
ASSESSMENT:
ORAL
RECITATION:

What are the reasons

why we do
budgeting?

What will you do if

Who among of you
your budgeting
do budgeting?
failed?
IMPORTANCE OF BUDGET
PREPARATION
 DIFFERENT TYPES OF
BUDGETS

SALES PRODUCTIO CASH

BUDGET N AND BUDGET
OPERATION
BUDGET
 DIFFERENT TYPES OF
BUDGETS

THE MOST IMPORTANT FINANCIAL

STATEMENTACCOUNT IN FORECASTING IS SALES
BECAUSE ALMOST ALL OTHER ACCOUNTS IN THE
FINANCIAL STATEMENTS ARE AFFECTED BY SALES.

THERE ARE TWO FACTORS TWO CONSIDER:

EXTERNAL FACTORS - GDP, INTEREST RATE,
FOREIGN EXCHANGE RATE, INCOME TAX RATE,
SALES INFLATION, COMPETITION, ECONOMIC CRISIS,
BUDGET REGULATORY ENVIRONMENT, AND POLITICAL
CRISIS

INTERNAL FACTORS - PRICE, PROMOTION

ACTIVITIES, DISTRIBUTION, AREA/OUTLET
COVERAGE, PRODUCTION CAPACITY, HUMAN
RESOURCES, MANAGEMENT STYLE, REPUTATION,
 DIFFERENT TYPES OF
BUDGETS

PRODUCTION OR QUARTER
OPERATION BUDGET IS 1 2 3
A SCHEDULE WHICH PROJECT
ED SALES 20,000 22,000 ?
PROVIDES INFORMATION TARGET
REGARDING THE ENDING 3,000 ? 5,000
INVENTORIE
NUMBER OF UNITS THAT S

SHOULD BE PRODUCED PRODUCTIO TARGET

OVER A GIVEN N OR BEGINNI
NG 2,500 3,000 3,500
ACCOUNTING PERIOD OPERATION S INVENTORIE

BASED ON EXPECTED BUDGET REQUIR

SALES AND TARGETED ED
? 22,500 26,500
* REQUIRED PRODUCTION IN UNITS = EXPECTED SALES +PRODUCT
TARGET END. INVENTORIES - BEG.
LEVEL OF ENDING
INVENTORIES
ION

INVENTORIES.
 DIFFERENT TYPES OF
BUDGETS

PRODUCTION OR QUARTER
OPERATION BUDGET IS 1 2 3
A SCHEDULE WHICH PROJECT
ED SALES 20,000 22,000 25,000
PROVIDES INFORMATION TARGET
REGARDING THE ENDING 3,000 3,500 5,000
INVENTORIE
NUMBER OF UNITS THAT S

SHOULD BE PRODUCED PRODUCTIO TARGET

OVER A GIVEN N OR BEGINNI
NG 2,500 3,000 3,500
ACCOUNTING PERIOD OPERATION S INVENTORIE

BASED ON EXPECTED BUDGET REQUIR

SALES AND TARGETED ED
20,500 22,500 26,500
* REQUIRED PRODUCTION IN UNITS = EXPECTED SALES +PRODUCT
TARGET END. INVENTORIES - BEG.
LEVEL OF ENDING
INVENTORIES
ION

INVENTORIES.
 DIFFERENT TYPES OF
BUDGETS

PROJECTED FINANCIAL STATEMENTS:

1. Forecast Sales
2. Forecast Cost of Sales and Operating Expenses
3. Forecast Net Income and Retained Earnings
4. Determine Balance Sheet Items That Will Vary With
Sales or Whose Balances Will be Highly Correlated
With Sales
5. Determine Payment Schedule for Loans CASH
6. Determine External Funds Needed BUDGET
7. Determine How External Funds Needed Will be
Financed
 DIFFERENT TYPES OF
BUDGETS

SALES PRODUCTIO CASH

BUDGET N AND BUDGET
OPERATION
BUDGET
 INDIVIDUAL ACTIVITY
You will share your own budget breakdown in everyday
expenses in school by answering this question “How you
budget your everyday school allowance?”.
 OBJECTIVES:

A B C D
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.
 OBJECTIVES:

/ B C D
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.
 OBJECTIVES:

A / C D
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.
 OBJECTIVES:

A B / D
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.
 OBJECTIVES:

A B C /
Share Connect
Explain Enumerate
experiences in the lesson
budget the key money in real
preparation. concepts. budgeting. life.