week 5 team acc/561

week 5 team acc/561

M
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L EL E T S
D UDG
B

INTRODUCTION
What is a budget? A
budget is an estimate
of income and expenses
during a
 
certain period of time. It
is an invaluable tool
used by most
organizations. Budgets
allow organization to
determine not only
where their money is
going, how much they
have, but also what
they need to do to
make more.

HYBRID BUDGET PROCESS
 Driving performance
 Developing buy in
 Combining top-down and bottom-up processes

FLEXIBLE BUDGET
4 Steps for Developing Flexible Budgets
 Identify Activity Index & Relevant Ranges
 Identify Variable Costs & Budgeted Variable Cost per Unit
 Identify Fixed Costs & Budgeted Amount for each Cost
 Prepare Budget for Selected Increment

PURCHASE BUDGET
Merchandising organization utilizes the purchases budget.
It is used to budget
costs that has a direct impact on the organization’s
profitability. A purchases
Company A
Direct Material Purchases Budget
For the Year Ending December 30, 2014
 
Quarter
2
3

budget is just one facet of a company’s overall functional
 
budget   strategy.
1
4
Year
Budgete
d
Producti
on in
Units
× DM
Required
per Unit
(lb.)
DM
Required
of
Producti
on (lb.)
+
Budgete
d Ending
DM (lb.)

Beginnin
g Direct
Material
(lb.)
Budgete
d DM
Purchas
es (lb.)
Cost per
Pound
Budgete
d DM
Purchas
es in $

1,334

912

1,148

1,778

5,172

4.00

4.00

4.00

4.00

4.00

5,336

3,648

4,592

7,112

20,688

547

689

1,068

961

961

−800

−547

−689

−1,068

−800

5,083

3,790

4,971

7,005

20,849

$3.10

$3.20

$3.50

$4.00

 

$15,757

$12,128

$17,398

$28,020

$73,304

SALES BUDGET
Benefits of a sales budget
 Seeing overhead
 Profit
 Direct labor
 Materials
 Inventory
 Being able to determine what is needed to make more profit

REFERENCES
Retrieved:=
Retrieved...

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