MGT 5 Chapter Notes - Chapter 9: Income Statement, Indian Railways, Direct Labor Cost
29 Jul 2017
School
Department
Course
Professor
Document Summary
Lo 1: state the essentials of effective budgeting and the components of the master budget. Budget: a for(cid:373)al writte(cid:374) state(cid:373)e(cid:374)t of (cid:373)a(cid:374)age(cid:373)e(cid:374)t"s pla(cid:374)s for a specified future ti(cid:373)e period (expressed in financial terms) Represents the primary method of communicating agreed-upon objectives throughout the organization. Benefits of budgeting: everyone plans ahead, there are definite objectives, creates an early warning system, facilitates the coordination of activities, greater management awareness, motivates personnel. There needs to be a sound organizational structure based on research and analysis. A budget can be prepared for any given period of time, most common is one year/12 months. Sales forecast: shows potential sales for the i(cid:374)dustr(cid:455) a(cid:374)d the co(cid:373)pa(cid:374)(cid:455)"s e(cid:454)pected share of such sales, involves the consideration of these factors: General economic condition, industry trends, market research studies, anticipated advertising and promotion, previous market share, changes in prices, technological developments. Budget committee: is responsible for coordinating the preparation of the budget (treasurer, president, chief accountant, management personnel)
