1、Work of Management PlanningControllingDirecting and MotivatingRemember!Planning and ControlP l a n n i n gP l a n n i n g - - i n v o l v e s d e v e l o p i n g objectives and p r e p a r i n g various budgets to achieve these objectives.- - i n v o l v e s t h e steps taken by management that a t
2、t e m p t t o e n s u r e t h e objectives are attained.It uncovers potential bottlenecks before they occur. It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts.It ensures that accounting records comply with generally accepted account
3、ing principles. It provides benchmarks for evaluating subsequent performance. Which of the following is not a benefit of budgeting? Advantages of BudgetingAdvantagesCommunicatingplansThink about andplan for the futureMeans of allocatingresourcesUncover potentialbottlenecksCoordinateactivitiesDefine
4、goaland objectivesResponsibility Accounting Managers should be held responsible for those items and only those items thatthe manager can actually controlto a significant extent.Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make deci
5、sions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type o
6、f accounting system is known as:A)responsibility accounting. B)contribution accounting. C)absorption accounting. D)operational budgeting. Choosing the Budget Period1999200020012002The annual operating budget may be divided into quarterlyor monthly budgets.Choosing the Budget Period1999200020012002Th
7、is budget is usually a twelve-month budget that rolls forward one month as the current month is completed.Participative Budget SystemSupervisorSupervisorMiddleManagementSupervisorSupervisorMiddleManagementTop ManagementThe Budget CommitteeA standing committee responsible for overall policy matters r
8、elating to the budget coordinating the preparation of the budgetA method of budgeting in which the cost of each program must be justified every year is called: operational budgeting. zero-based budgeting. continuous budgeting. responsibility accounting. Zero-Base BudgetingManagers are required to ju
9、stify all budgeted expenditures, not just changes in the budget from the previous year. The baseline is zero rather than last years budget.Let us practice on the basics of budgeting!Parlee Companys sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are collected in the month
10、of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data: Total sales: January $60,000February$70,000March$50,000April$30,000Total cash receipts in April would be budgeted to be: A)$38,900. B)$47,900.
11、 C)$27,230. D)$36,230. Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 20% of the next months sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are: Budgeted sales in units JuneJulyAugustSept
12、ember 30,000 40,000 60,000 50,000Budgeted production for August would be: A) 62,000 units. B) 70,000 units. C) 58,000 units. D) 50,000 units. Friden Company has budgeted sales and production over the next quarter as follows:AprilMayJuneSales in units 100,000120,000?Production in units 104,000128,000
13、156,000The company has 20,000 units of product on hand at April 1. A minimum of 20% of the next months sales needs in units must be on hand at the end of each month. July sales are expected to be 140,000 units. Budgeted sales for June would be (in units): A) 188,000. B) 160,000. C) 128,000. D) 184,0
14、00 Marple Companys budgeted production in units and budgeted raw materials purchases over the next three months are given below:JanuaryFebruaryMarchBudgeted production (in units) 60,000 ?100,000Budgeted raw materialspurchases (in kilograms) 129,000165,000188,000Two kilograms of raw materials are req
15、uired to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following months production needs. The company is expected to have 36,000 kilograms of raw materials on hand on January 1. Budgeted production for February should be: A) 105,000
16、 units. B) 82,500 units. C) 150,000 units. D) 75,000 units. Budgets can be defined as:“a quantitative model, or summary of the e x p e c t e d c o n s e q u e n c e s o f t h e organizations short-term operating activities.”Management AccountingAtkinson, Banker, Kaplan & YoungWhat is this definition
17、 implying?The definition suggests:Availability of quantitative data,Predictability of short-term outcomes,Clear-cut organizational structures.There is one major logical problem, which is?If the above are true, what do you need the If the above are true, what do you need the budget for?budget for?The
18、 budgetary process is rather a processTo quantify “qualitative” judgment,To forecast the impacts of some uncertain events,T o s i m p l i f y t h e c o m p l e x organizational structures.As Zimmerman indicated (p.244), the budget processis a communication device involving both vertical and horizont
19、al information transferis a negotiation and internal contracting procedureis part of the performance evaluation systempartition decision rightsBudgets to Solve “Agency” ProblemsShort-term budgets as internal contracts. To formally commit responsibility centers As a warning for future monitoring acti
20、onsLong-term budgets to reduce information asymmetry. To solicit private, specialized information from local managers Force managers to think strategically, rather than on just the short-term resultsBudgets to Solve “Agency” ProblemsLine-item budgets Authorize managers to spend only up to a certain
21、amount per line item Cannot transfer excess to and from line-items No incentive to reduce spendingBudget lapsing no carryovers to next period Incentive to spend all the budgeted amounts Intend to avoid managers building up slacks and smoothing performance over timeInternational Aspects of Budgeting Multinational companies face special problems when preparing a budget. Fluctuations in foreign currency exchange rates. High inflation rates in some foreign countries. Differences in local economic conditions. Local governmental policies.
