Planning Flashcards
1
Q
What is a master budget?
A
Static budget for the company as a whole
Summarizes:
Operating Budget (income statement, sales, SGA)
and
Financial Budget (capital expenditures, cash, balance sheet, cash flows)
2
Q
What is a static budget?
A
Analyzes conditions for a specific level of activity
3
Q
What are the steps in strategic planning?
A
- Prepare mission statement - identifies purpose and highest values
- Identify goals and objectives to work towards mission
- Identify specific performance measures with each goal and objective
- Design tactics - specific actions used to meet goals
4
Q
What is Kaizen budgeting?
A
Managers make cost projections that incorporate their expectations for future improvements
5
Q
What are the steps in preparing a master budget?
A
- Estimate future sales volume
- Use sales volume to estimate future revenue
- Use collection histories to estimate future collections
- Estimate COGS based on number of units sold
- Use current FG inventory, budgeted EI, and COGS to estimate number of units to manufacture
- Use units manufactured to estimate future DM, DL and OH costs
- Use DM needs, current DM inventory, and budgeted EI to estimate future purchases
- Use purchase terms to estimate future payments
- Complete cash flow budget
6
Q
What is formula for budgeted material purchases?
A
Units sold \+ Budgeted increase in FG - Budgeted decrease in FG = Units to be manufactured x Units of raw material per unit of FG = Units of raw material needed for production \+ Budgeted increase in raw materials - Budgeted decrease in raw materials = Budgeted raw materials purchases
7
Q
What is formula for production budget?
A
Budgeted sales \+ Desired FG EI = Total needs - FG BI = Number of units to be produced
8
Q
What is the order of preparing budgets?
A
Sales Production DM Purchases Cash Disbursements Budgeted F/S
9
Q
What is a flexible budget?
A
Can be adjusted for changes in volume
y =a + (b x X)
