ACCT 1B Study Guide - Final Guide: Budget
16 Jun 2020
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Budgeting in non-manufacturing companies merchandising; very important to merchandising operation. Sales is starting point, major differences, with manufacturing is no production budget. Also does not use the manufacturing budgets (dm, dl, moh) Merchandising purchasing budget (instead of production): shows the estimated cost of goods to purchase to meet sales requirements. When merchandiser is departmentalized, prepare sales and purchase budget for each department. Service companies the critical factor in budgeting is coordinating professional staff needs with anticipated services. Budgeted service revenue is based on expected output (expected client billings) or expected input (projected billable time times billable rate). Not for profit organizations budgets are based on cash flows (anticipated expenditures- receipts) rather than revenues less expenses. Management"s task is often to fine the necessary receipts to support the expenditures. For government units the budget has to be approved by a legislative vote and becomes law. Management does not have a lot of discretion.
