Escolar Documentos
Profissional Documentos
Cultura Documentos
Control
C t l
involves the steps
taken by
management that
attempt to ensure
the objectives
j
are
attained.
Advantages of Budgeting
Define goal
and objectives
C
Communicate
i t
plans
Think
Thi
k about
b t and
d
plan for the future
Advantages
Coordinate
activities
Means of allocating
resources
Uncover potential
bottlenecks
Operating
O
ti
Budget
B d t
2005
2006
2007
2008
A continuous budget is a
12
12--month budget that rolls
forward one month (or quarter)
as the current month (or quarter)
is completed.
5
Direct
Materials
Budget
Production
Budget
Selling and
Administrative
Budget
g
Direct
Labor
Budget
Manufacturing
Overhead
Budget
Cash
Budget
Budgeting Example
n Royal
R
lC
Company iis preparing
i b
budgets
d t ffor th
the
quarter ending June 30.
o Budgeted sales for the next five months are:
April
May
June
July
August
20,000 units
50,000 units
30,000 units
25,000 units
15 000 units
15,000
units.
The
Th March
M h 31 accounts
t receivable
i bl b
balance
l
off
$30,000 will be collected in full.
10
Sales
Budget
and
Expected
Cash
Collections
Production
B d t
Budget
12
A
Assumed
d ending
di iinventory.
t
13
14
17
21
22
23
$
Budgeted finished goods inventory
Ending inventory in units
Unit product cost
Ending finished goods inventory
Total
2.00
0.50
2.49
4.99
5,000
$ 4.99
4 99
$24,950
Production Budget.
25
27
Purchases $
$143,700
,
of equipment
q p
in May
y and
$48,300 in June (both purchases paid in cash)
30
Cash
Budget
Budgeted
Income
Statement
$ 1,000,000
499 000
499,000
501,000
260,000
241,000
,
2,000
$ 239,000
Ending Finished
Goods Inventory.
Selling and
Administrative
Expense Budget.
Cash Budget.
32
Land - $50
$50,000
000
Common stock - $200,000
Retained earnings - $146,150
$146 150
Equipment - $175,000
33
Royal Company
Budgeted Balance Sheet
June 30
Current assets
C h
Cash
Accounts receivable
y
Raw materials inventory
Finished goods inventory
Total current assets
Property and equipment
Land
Equipment
T
Total
l property and
d equipment
i
Total assets
Accounts payable
Common stock
Retained earnings
Total liabilities and equities
25% of June
sales of
$300,000.
43,000
43
000
75,000
4,600
24,950
147,550
11,500 lbs.
at $0.40/lb.
5,000 units
at $4.99
$4 99 each
each.
50,000
367,000
41 000
417,000
$ 564,550
$
28,400
200,000
336 150
336,150
$ 564,550
50% of June
purchases
of $56,800.
34
Royal Company
Budgeted Balance Sheet
June 30
Current assets
C h
Cash
Accounts receivable
y
Raw materials inventory
Finished goods inventory
Total current assets
Property and equipment
Land
Equipment
T
Total
l property and
d equipment
i
Total assets
Accounts payable
Common stock
Retained earnings
Total liabilities and equities
43,000
43
000
Beginning balance
75,000
Add: net income
4,600
Deduct: dividends
24,950
Ending balance
147,550
$146,150
239,000
(49 000)
(49,000)
$336,150
50,000
367,000
41 000
417,000
$ 564,550
$
28,400
200,000
336 150
336,150
$ 564,550
35