Managerial Accounting Chapter 9

Front 1

Budget

Back 1

A quantitative plan for acquiring and using resources over a specified time period.

Front 2

Cash Budget

Back 2

A detailed plan showing how cash resources will be acquired and used over a specified period of time.

Front 3

Continuous Budget
aka Perpetual Budget

Back 3

A 12-month budget that rolls forward one month as the current month is completed.

Front 4

Control

Back 4

Those steps taken by management to increase the likelihood that all parts of the organization are working together to achieve the goals set down at the planning stage.

Front 5

Direct Labor Budget

Back 5

A detailed plan that shows the direct labor-hours required to fulfill the production budget.

Front 6

Direct Materials Budget

Back 6

A detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

Front 7

Manufacturing Overhead Budget

Back 7

A detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period.

Front 8

Production Budget

Back 8

A detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs.

Front 9

Sales Budget

Back 9

A detailed schedule showing expected sales expressed in both dollars and units.

Front 10

Selling and Administrative Expense Budget

Back 10

A detailed schedule of planned expenses that will be incurred in areas other than manufacturing during a budget period.

Front 11

In what order should budgets be prepared?

Back 11

1) Sales budget
2) Production budget
3) Direct Materials budget
4) Direct Labor budget
5) Manufacturing Overhead budget
6) Ending Finished Goods Inv budget
7) Selling and Admin expense budget
8) Cash budget

Front 12

How do you prepare a production budget?

Back 12

Budgeted Unit Sales......#
Add desired ending Inv...#
Total Needs..................#
Less beginning Inv.........#
Required production.......#

Front 13

How do you prepare a direct materials budget?

Back 13

Raw Materials to meet production
Add desired end inv
Total raw materials need
Less beginning inv
Raw materials to be purchased

Front 14

How do you prepare a direct labor budget?

Back 14

Required production in units
x Direct labor-hours per unit
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Total direct labor-hours needed
x Direct labor cost per hour
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Total direct labor cost

Front 15

How do you prepare a manufacturing overhead budget?

Back 15

Budgeted direct labor-hours
x Variable manufacturing overhead rate
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= Variable Manufacturing Overhead
+ Fixed Manufacturing Overhead
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= Total Manufacturing Overhead
- Less Depreciation (non-cash overhead cost)
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= Cash disbursements for MOH

Front 16

How do you prepare a cash budget?

Back 16

Cash balance, beginning
+ Add receipts
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= Total cash available
- Less disbursements
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Excess (deficiency) of cash available over disbursements