Budget

Budget

1. Master budgets

   • Is an integrated set of operating and financial budgets for a period of time
     • The master budget is an integrated set of operatinal and financial budget in a period of time

2. Advantages

   • Planning
   • Directioning
   • Controlling

3. Operational budget

   • Sales budgets
     • Production budgets
       • Direct Material Purchase Budgets
       • Direct Labor Cost Budgets
       • Factory Overhead Cost Budget

4. Financial budget

   • Reflects the financial and investing activites
     • Cash budgets
     • Capital expenditures budgets

5. Importance of the budgeting

   • Planning involves setting goals to guide decisions and help motivate employees. The planning process often identifies where operations can be improved.
     • Directing involves decisions and actions to achieve budgeted goals. A budgetary unit of a com-pany is called a responsibility center. Each responsibility center is led by a manager who has the authority and responsibility for achieving the center’s budgeted goa