The document discusses various types of budgets including master budgets, operating budgets, financial budgets, sales budgets, cash budgets, flexible budgets, and activity-based budgets. It explains that a master budget includes all other financial budgets as well as a budgeted income statement and balance sheet. Operating budgets show projected revenue and expenses, while financial budgets project short-term and long-term incomes and outflows. Sales budgets are important as all other budgets are based on the sales budget. Cash budgets can protect companies from cash flow issues. Flexible budgets show costs for varying activity levels and can be constructed for actual activity levels for control purposes. Activity-based budgets determine resources needed to create output by working backward from activities and their drivers.

1. Audrey ( 1642095 )
Lecturer : Santi Yopie, SE., MM., CMA.,
PROJECT+., CIBA., CPA., BKP.

2.  Budget is an estimate of costs, revenues, and resources
over a specified period, reflecting a reading of future
financial conditions and goals.
 A budget is a comprehensive financial plan for
achieving the financial and operational goals of an
organization. Used correctly, a budget is the map of the
company's strategic plan. In creating the budget, the
company is developing its objectives for the acquisition
and use of its resources.

3.  Control is the process of setting standards, receiving
feedback on actual performance, and taking corrective
action whenever actual performance deviates from
planned performance.
 Budget as a Control Tool
A budget serves as a control tool to provide standards for
evaluating performance. A budget can cover :
1. Profit planning – forecast of revenues and expenses.
2.Cash budgeting – forecast of cash needs and sources.
3.Balance sheet forecasting – anticipating future assets,
liability and net worth position of the business.

4. 1. A budget can keep you out of debt or help you get out of
debt.
2. A budget can help you meet your savings goals. It
includes a mechanism for setting aside money for savings
and investments.
3. A budget reveals areas where you're spending too much
money so you can refocus on your most important goals.
4. A budget is a guide that tells you whether you're going in
the direction you want to be headed in financially. A budget
lets you control your money instead of your money
controlling you.
5. A budget helps you prepare for emergencies or large or
unanticipated expenses that might otherwise knock you for
a loop financially.

5. Master Budget is a master budget is an expensive business
strategy that documents expected future sales, productions
levels, purchases, future expenses incurred, capital
investments, and even loads to be acquired and repaid. The
master budget includes all other financial budgets as wells
as a budgeted income statement and balance sheet.
Operating Budget is an operating budget shows the
company's projected revenue and associated expenses for an
upcoming period (usually the next year) and is often
presented in an income statement format.
Financial Budget is a financial budget is a projection of
incomes and outflows of the organization for the long-term
as well as short-term.

6.  The sales forecast is a critical input for building the sales
budget. However, it is not necessarily equivalent to sales
forecast, management may decide that the firm can do
better than then forecast indicates. Consequently. Actions
may be taken to increase the sales potential for the coming
year. This adjusted forecast then becomes the sales budgets.
 The difference between sales forecast and a sales budget ?
Sales Forecast ; calculated from historical information , we
can use last month or last three months to show you the
expected growth rate to indicate the future.
Sales Budget ; come from management with a view increasing
profits and encourage increasing the sales revenues.

7. Yes, it is true.
The reason because the sales budget are so important
because all of the business budget are based on this one and
approved by the budget committee that describes expected
sales for each product in units and prices. Without the sales
budget, you cannot forecast anything else that will go on
your business. You do not know how much you should
spend on cost (ex : advertising and marketing), how much
you should spend on production or any other component of
your business. While you know your fixed expenses like rent
and utilities, the rest of the expenses will largely depend on
how much you sell. The sales budget must be constructed
first, before other budgets can be constructed.

8.  The pessimistic individual vice president will think lowly
of sales and the budget will be tighten to the lowest point
which could be a dangerous move for a business. If I was
the head of budget process, I might increase the budgeted
sales to take out the individual bias.

9.  Due to its optimistic attitude, he/she will underestimate
the direct material (DM) , direct labour (DL), and
overhead (OH) because of a mindset that everything
will run smoothly which that kind of thinking only
occurs with optimistic individuals. As the person in
charge, I must increase those cost and make it as
realistic as possible.

10.  The learning curve is the relationship between unit cost
of production and increasing number of units. As the
time go on, the number of units produced in the time
period will increase and the cost per unit will decrease.
The budgets affected will be the direct materials
purchases budget, the direct labor budget, and the
overhead budget.

11. The preparation of cash budget is an important
management task. While some small businesses may be
able to survive for a time without budgeting, savvy
business owners will realize its importance. A cash budget
can protect a company from being unprepared for
seasonal fluctuations in cash flow or prepare a company
to take advantage of unexpected quantity discounts from
suppliers. Many small businesses find it helpful to
prepare monthly cash budgets and to analyze any
variances between the budgeted and actual amount on a
monthly basis. This enables small business owners and
managers to stay on top of any unexpected cash uses.

12. Criticisms of the master budget can be classified into
several categories.
The traditional master budget is :
1. Department oriented and does not recognize the
interdependencies among department.
2. Static, not dynamic.
3. Results, not process, oriented.

13. Static Budget is a static budget is fixed for the entire
period covered by the budget, with no changes based on
actual activity.
The problem with a static budget is the absence of
flexibility to adjust to unpredictable changes. In
industry, fixed budgets are appropriate for those
departments whose workload does not have a direct
current relationship to sales, production, or some other
volume determinant related to the department’s
operations. The work of the departments is determined
by management decision rather than by sales volume.

14. 1. A flexible budget shows costs for varying levels of
activity.
- Useful for planning.
- Useful for sensitivity analysis.
2. A flexible budget can be constructed for the actual level
of activity.
- Useful for control.
- Compares actual costs to budgeted amounts for actual
level of activity.

15. The activity-based budget begins with output and then determines
the resources necessary to create that output. Ideally, the
organization translates its vision into a strategy with definable
objectives in order to create value. Ways of creating value include
growing market share, improving sales rates, reducing expenses,
increasing profit margin, increasing productivity, and reducing the
cost of capital. We can see how clearly ABB is related to
performance evaluation and, in particular, to economic value
added. We can look at a department’s budget from three
perspectives: a traditional approach, a flexible budgeting relies on
the use of line items, such as salaries, supplies, depreciation on
equipment, and so on. The flexible budget uses knowledge of cost
behavior to split the line items into fixed and variable components.
The activity-based budget works backward from activities and
their drivers to the underlying costs.