tailieunhanh - Lecture Cost management: Measuring, monitoring, and motivating performance (3rd edition) – Chapter 10

Chapter 10 - Static and flexible bugets. In this chapter students will be able to: Discuss the relationships among budgets, long-term strategies, and short-term operating plans; describe a master budget and explain how it is prepared; explain how operating budgets are prepared;. | LO1 Discuss the relationships among budgets, long-term strategies, and short-term operating plans LO2 Describe a master budget and explain how it is prepared; explain how operating budgets are prepared LO3 Explain how a cash budget is developed LO4 Discuss the differences between static and flexible budgets LO5 Explain budget variances and how they are calculated LO6 Discuss how budgets are used to monitor and motivate performance LO7 Describe other approaches to budgeting Chapter 10: Static and Flexible Bugets LO1 Discuss the relationships among budgets, long-term strategies, and short-term operating plans Budgeting A budget is: The formalized financial plan for operations of an organization for a specified future period An organization’s financial roadmap It reflects management’s forecast of the financial effects of an organization’s plans for one or more future time periods. The first bullet and its secondary bullets are all automated. The first click brings in the second bullet. Budgeting and the Strategic Management Process Budgets and Levers of Control Budget Cycles A budget cycle is a series of steps that organizations follow to develop and use budgets LO2 Describe a master budget and explain how it is prepared; explain how operating budgets are prepared Master Budgets A master budget is: A comprehensive plan for the upcoming accounting period. Usually prepared for a one-year period. Based on a series of budget assumptions. The master budget consists of several subsidiary budgets, in two categories: Operating budgets management’s plan for revenues, production, and operating costs Financial budgets management’s plan for capital expenditures, long-term financing, cash flows, and short-term financing The first bullet and its secondary bullets are all automated. The first click brings in the second bullet. Developing a Master Budget The master budget is developed using a set of budget assumptions, which are plans and predictions about next period’s operating | LO1 Discuss the relationships among budgets, long-term strategies, and short-term operating plans LO2 Describe a master budget and explain how it is prepared; explain how operating budgets are prepared LO3 Explain how a cash budget is developed LO4 Discuss the differences between static and flexible budgets LO5 Explain budget variances and how they are calculated LO6 Discuss how budgets are used to monitor and motivate performance LO7 Describe other approaches to budgeting Chapter 10: Static and Flexible Bugets LO1 Discuss the relationships among budgets, long-term strategies, and short-term operating plans Budgeting A budget is: The formalized financial plan for operations of an organization for a specified future period An organization’s financial roadmap It reflects management’s forecast of the financial effects of an organization’s plans for one or more future time periods. The first bullet and its secondary bullets are all automated. The first click brings in the second bullet.