SMG AC 222 Lecture 8: AC Notes Chapter 8

• School: Boston University
• Department: Accounting
• Course: SMG AC 222
• Professor: Greg Sabin

Document Summary

A detailed plan for the future expressed in formal quantitative terms. The budgeting process: planning, allocation of resources, communication, long range perspective, coordination/integration, control - benchmarking. Ensures plan is being properly executed or modified as circumstances change. Top down: management dictates, lower management follows. Bottom up: managers at all levels prepare budgets based on company guidelines: a self-imposed or participative budget process. Master budget: a collection of separate but interdependent budgets that formally lay out the co(cid:373)pa(cid:374)y"s sales, productio(cid:374), a(cid:374)d fi(cid:374)a(cid:374)cial goals. *many of the schedules in the master budget rely on estimations and assumptions managers make that may be incorrect evaluate beginning balance sheet and budgeting assumptions before starting master budget to (cid:373)i(cid:374)i(cid:373)ize (cid:862)what-if(cid:863) (cid:395)uesito(cid:374)s* Sales budget: where you begin: detailed schedule showing expected sales for the budget period. Influences the variable portion of the selling and administrative expense budget: feeds into the production budget, cash sales, collections on account.