CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-1 a. b. c. d. The budgeting cycle includes the following elements: Planning the performance of the company as a whole as well as planning the performance of its subunits. Management agrees on what is expected. Providing a frame of reference, a set of specific expectations against which actual results can be compared. Investigating variations from plans. If necessary, corrective action follows investigation. Planning again, in light of feedback
Words: 11308 - Pages: 46
hour/unit x actual good output + work 1 VARIABLE OVERHEAD SPENDING VARIANCE = AH (AR-SR) VAIABLE OVERHEAD EFFICIENCY VARIANCE = SVR (AH –SH)…………SVR = standard variable overhead ratio…….SH = actual output x standard quantity of direct labour FIXED OH BUDGET VARIANCE = Actual FOH – Budgeted FOH ……. Budgeted FOH may be given in annual and need to be turned into monthly e.g. X/12 FIXED OH VOLUME VARIANCE = Budgeted FOH – Applied FOH……. Applied = PROHR x standard hours. In order to determine applied need
Words: 959 - Pages: 4
I agree the statement "Budgeting is a key component in management short and long term planning.". A budget is defined as a plan of operations based on a given estimate of expected income and expense in the future. As such, it is thought of as an action plan, outlining an organization's financial and operational goals. The budget expresses the quantitative arrangement of the entity's management, in terms of allocating the business resources, performance evaluation, and formulating prospective plans
Words: 963 - Pages: 4
Managing Director to attend a meeting next week to set in motion the preparation of the annual budget for your department and the organisation as a whole. Also, in the course of your conversation the Managing Director has mentioned that the company is seeking to raise finance for a substantial capital investment opportunity that has arisen recently. You are required to outline your understanding of the budget process and also make some suggestions as to how the company would attempt to raise finance
Words: 3240 - Pages: 13
More Tutorials: (http://homeworkfy.com/ ) Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter: As of December 31, (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $48,000 (debit) Accounts receivable $224,000 (debit) Inventory $60,000 (debit) Buildings and equipment, net $370,000
Words: 579 - Pages: 3
example? 28. How does sales mix affect the contribution margin? 29. Definition of mos 30. How to compute of mos? 31. Usefullness of (mos) 32. Can (mos) be negative? BUDGETING 1. What is definition of budget? 2. What is purpose of budgeting? 3. What are the objectives of budgeting? 4. What are the advantages
Words: 12519 - Pages: 51
Prepare a master budget and use the information in it to analyze the results of operations. This chapter will examine in detail the preparation of a master budget, including schedules for sales, collections, cost of sales, payments, operating expenses, a cash budget, and budgeted income statement and balance sheet. It will discuss the purposes and uses of budgets for managers. Profit planning involves the preparation of a number of budgets, integrated as the master budget, that outline what
Words: 1792 - Pages: 8
the broad-based statements and express them in terms of detailed steps needed to attain those goals. Budgets are the short-term plans used to implement the steps included in the strategic plans. For example, a company may have a goal of "Becoming the number 1 company in the industry." The strategic plans would include such statements as: "Increase sales volume by 20% per year." The master budget would state the number of units that are needed to be produced and sold in the coming period to meet
Words: 342 - Pages: 2
computers (Packard –Bell, Hewlett-Packard, Apple) and clothing (Levis, REI, GAP) are part of our lives. Services like information communication (America Online, CompuServe, and Microsoft), dining (McDonald’s, Burger King, Wendy’s), and car rental (Hertz, Budget, Alamo) make our lives easier. A business can be as small as an in-home child care service or as massive as Wal-Mart. Nearly 1 million new businesses are started in the United States each year, no different than Job Direct in the opening article.
Words: 21383 - Pages: 86
without the preparation and use of budgets”. What is budgeting? Budgeting is the continuous cycle of planning and evaluation used by a company in order to achieve the stated goals and objectives of the organization. The process of allocating a finite amount of resources to the prioritized needs of the organization and a tool we use to control spending decisions. An entrepreneur needs to plan for his business’ future and he/she must plan for the future. Budgets usually show a clear representation
Words: 739 - Pages: 3
