This document discusses budgeting systems and activity-based budgeting. It provides an overview of the purposes of budgeting, types of budgets including master budgets, long-range budgets and rolling budgets. It then describes the differences between activity-based costing and activity-based budgeting. Finally, it provides an example of how to create sales, production, direct materials, and direct labor budgets for a company called Breakers Inc. for the quarter ending June 30.
Flipkart acquired Myntra in 2014 in a deal valued at Rs. 2,000 crore, making it the largest e-commerce acquisition in India at the time. Flipkart wanted to expand into fashion and lifestyle products, areas which Myntra had already captured nearly 30% of the market. Myntra also wanted to enter the garments industry. As part of the deal, Mukesh Bansal from Myntra joined the Flipkart board to head the new fashion business. Both companies continued operating independently while exploring future integration possibilities.
Microsoft acquired Nokia's mobile phone business in 2013 for $7.2 billion in an effort to become a major player in the smartphone market. However, Microsoft struggled to compete with Android and iOS devices. By 2015 Microsoft had written off $7.6 billion of the acquisition cost and laid off thousands of Nokia employees. Microsoft then sold the Nokia brand to HMD Global in 2016. Reasons for the failure included Microsoft entering the market too late, an inability to attract developers or consumers to its Windows platform, and not being able to match Apple or cheaper Android phones on quality and price.
Slides used in a webinar presentation on the future of supply chain management. Presenters from IBM and Colgate joined with Lora Cecere, founder of Supply Chain Insights.
This document discusses financial strategy and objectives for a new business venture. It explains that a financial strategy should answer questions about startup costs, ongoing operating costs, capital needs, and sources of funding. The key components of a financial strategy are identified as sales forecasts, expenses, profits, balance sheets, cash flow projections, and repayment plans. The document also outlines the financial planning process and defines important financial terms like breakeven point, market share, profit margin, return on investment, and the difference between startup costs and operating expenses.
The document provides an overview of accounting for intangible assets under IAS 38. It discusses the definition of intangible assets, recognition criteria, measurement at cost or fair value, amortization of intangible assets with finite useful lives, impairment testing, and disclosure requirements. The document also covers topics such as government grants, internally generated intangible assets, revaluation model, and differences between IFRS and Indian GAAP treatment of intangible assets.
Amanda Rendle, Global Head of Marketing, HSBC Commercial Bank, originally shared this presentation at LinkedIn FinanceConnect:14 in New York City.
HSBC’s Commercial Bank is devoted to creating opportunity for international aspirant businesses through facilitating global connections. Learn how HSBC CMB built a global content ecosystem that helps customers and prospects grow their businesses through an intelligent integrated program. See how they leveraged their Global Connections portal, a Global Connections group on LinkedIn, content rich media, and "in-feed" snackable content – to better service their customers.
The modern trade sector in India has grown rapidly from $10 billion in 2005 to $70 billion in 2015. Key disruptors driving this growth include price wars between retailers, exclusive product offerings, and increased convenience through mobile technologies. While high costs and competition pose challenges, enablers like multi-channel offerings, digital innovations, and personalized customer experiences will help drive continued growth. Rapid income growth, urbanization, nuclearization, and changing attitudes all contribute to the certainty that modern trade will continue growing quickly in the future.
Flipkart acquired Myntra in 2014 in a deal valued at Rs. 2,000 crore, making it the largest e-commerce acquisition in India at the time. Flipkart wanted to expand into fashion and lifestyle products, areas which Myntra had already captured nearly 30% of the market. Myntra also wanted to enter the garments industry. As part of the deal, Mukesh Bansal from Myntra joined the Flipkart board to head the new fashion business. Both companies continued operating independently while exploring future integration possibilities.
Microsoft acquired Nokia's mobile phone business in 2013 for $7.2 billion in an effort to become a major player in the smartphone market. However, Microsoft struggled to compete with Android and iOS devices. By 2015 Microsoft had written off $7.6 billion of the acquisition cost and laid off thousands of Nokia employees. Microsoft then sold the Nokia brand to HMD Global in 2016. Reasons for the failure included Microsoft entering the market too late, an inability to attract developers or consumers to its Windows platform, and not being able to match Apple or cheaper Android phones on quality and price.
Slides used in a webinar presentation on the future of supply chain management. Presenters from IBM and Colgate joined with Lora Cecere, founder of Supply Chain Insights.
This document discusses financial strategy and objectives for a new business venture. It explains that a financial strategy should answer questions about startup costs, ongoing operating costs, capital needs, and sources of funding. The key components of a financial strategy are identified as sales forecasts, expenses, profits, balance sheets, cash flow projections, and repayment plans. The document also outlines the financial planning process and defines important financial terms like breakeven point, market share, profit margin, return on investment, and the difference between startup costs and operating expenses.
The document provides an overview of accounting for intangible assets under IAS 38. It discusses the definition of intangible assets, recognition criteria, measurement at cost or fair value, amortization of intangible assets with finite useful lives, impairment testing, and disclosure requirements. The document also covers topics such as government grants, internally generated intangible assets, revaluation model, and differences between IFRS and Indian GAAP treatment of intangible assets.
Amanda Rendle, Global Head of Marketing, HSBC Commercial Bank, originally shared this presentation at LinkedIn FinanceConnect:14 in New York City.
HSBC’s Commercial Bank is devoted to creating opportunity for international aspirant businesses through facilitating global connections. Learn how HSBC CMB built a global content ecosystem that helps customers and prospects grow their businesses through an intelligent integrated program. See how they leveraged their Global Connections portal, a Global Connections group on LinkedIn, content rich media, and "in-feed" snackable content – to better service their customers.
The modern trade sector in India has grown rapidly from $10 billion in 2005 to $70 billion in 2015. Key disruptors driving this growth include price wars between retailers, exclusive product offerings, and increased convenience through mobile technologies. While high costs and competition pose challenges, enablers like multi-channel offerings, digital innovations, and personalized customer experiences will help drive continued growth. Rapid income growth, urbanization, nuclearization, and changing attitudes all contribute to the certainty that modern trade will continue growing quickly in the future.
IND AS 16 provides guidance on accounting for plant, property and equipment (PPE). Key points include:
- An asset must meet the definition of a PPE to be classified as such, which includes being held for use in production, rental or administration with a useful life of more than 12 months.
- Initial recognition of a PPE involves capitalizing all costs required to bring the asset to working condition. Special cases like barter transactions also have specific guidance.
- Subsequent expenditures are generally expensed unless increasing the life or efficiency of the asset. Major replacements are capitalized by adjusting the carrying value.
- PPE can be carried at cost or revaluation model with periodic revaluations and accounting for
A Project Work on “A Study on Cash Flow Statement Analysis- at Penna Cement ...ijtsrd
Digital payments are gradually replacing physical cash transactions. In other words, e payment systems or cashless transactions make up digital payments in the online platform, and online payments are widely used as they are perceived to be easy, quick, and comfortable. Digitalization is the key for future growth of the Indian economy. In order to make this into reality, the Indian government and e payment service providers banks are establishing numerous awareness programs to bring e payment systems into the hands of the people in India. Mothikari Prathibha Bai | Dr. B. C Lakshmanna "A Project Work on “A Study on Cash Flow Statement Analysis- at Penna Cement Industries Ltd" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45204.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45204/a-project-work-on-%E2%80%9Ca-study-on-cash-flow-statement-analysis--at-penna-cement-industries-ltd/mothikari-prathibha-bai
The document discusses balance sheet analysis. It defines a balance sheet as a financial statement that presents the assets and liabilities of a company or individual. There are three main methods of balance sheet analysis: vertical analysis, which analyzes a single period statement; horizontal analysis, which compares data sets over two or more periods; and ratio analysis, which uses ratios to compare financial metrics to benchmarks. Common ratios examined in balance sheet analysis include liquidity, capital structure, profitability, and activity ratios.
STRATEGIC PLAN OF BIG BILLION DAY
EFFECT OF BIG BILLION DAY
IMPACT OF BIG BILLLION DAY ON BIG BILLION DAY
CUSTOMER REACTION TOWARDS BIG BILLION DAY
FLIPKART AFTER BIG BILLION DAY
SITUATIONAL ANALYSIS OF FLIPKART
CAMPAIGN OBJECTIVE
CAMPAIGN STRATEGY
ACHIEVEMENTS OF BIG BILLION DAY
Here are my thoughts on these questions:
1. If I had 1 million euros to invest for 20 years, I would invest in a solar power company rather than an oil company or wind energy company. Solar power is one of the fastest growing renewable energy technologies and has significant potential for further cost reductions and scaling up over the next 20 years. Oil companies face challenges from transition away from fossil fuels to meet climate goals. While wind is also growing, solar has fewer geographical constraints and is modular, allowing more distributed deployment. First Solar in particular seems well positioned as a technology and cost leader currently.
2. Given changes in the renewable energy market and First Solar's strong position established in the US through vertical integration, I don't think they
CATERPILLAR Mini Case from Marketing Management by Kotler as a part of Summer Internship under Professor Sameer Mathur, IIM Lucknow.
By Aravind M, IIT Madras
The document summarizes IFRS 3 Business Combinations. It outlines that IFRS 3 specifies that all business combinations must be accounted for using the purchase method. It defines key terms like business, acquisition date, and cost of a business combination. It describes how to identify the acquirer, measure assets and liabilities at fair value on the acquisition date, and account for goodwill and negative goodwill. Significant differences from Indian GAAP are also highlighted.
The document provides information about retail management and the retail industry in India. It discusses key topics like:
1. Retailing encompasses the selling of goods and services to consumers for personal use and is the largest stage in distribution. Major retailers like Walmart are leading companies globally in terms of sales.
2. The Indian retail industry is one of the most dynamic industries and accounts for 10% of GDP and 8% of employment. Organized retail is expected to double to $1 trillion by 2020 driven by income growth, urbanization, and attitude shifts.
3. New technologies are improving retail productivity while there are also opportunities to start retail businesses in India. However, retailers face challenges from economic weakness impacting
IAS 1 provides the requirements for presenting general purpose financial statements to ensure comparability. It sets out guidelines for the structure of financial statements and minimum requirements for content. Financial statements must include a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. Notes to the financial statements must also be presented. IAS 1 specifies the components that must be presented in each financial statement and note disclosure requirements.
International Business Machine (IBM) has experienced many ups and downs over its long history since 1910. [1] Key factors in IBM's recent success include its well-known brand name, global distribution capabilities, and ability to change its organization when technology changes. [2] IBM's plans to solve some of the world's most challenging problems may succeed because it hires scientists, engineers, and consultants, invests $50 billion in R&D with 30% for long-term research. [3] IBM's biggest competitors today are technology and consulting firms related to hardware and software like HP and Accenture. However, risks to IBM's current strategy include low success rates, R&D becoming obsolete, inability to
This document provides information about cash budgets, including what they are, their main functions, and factors that affect them. It then includes an example cash budget for a company called Box Ltd. over a 9-month period from June to December 2008. The budget shows expected cash receipts from sales, additional sources of cash, and expected cash payments for items like purchases, expenses, taxes, and capital expenditures. It calculates the expected cash balance at the end of each month. Cash budgets are important planning tools that help ensure a business has sufficient cash flow to cover expenses and identifies times when additional financing may be needed.
Managerial Accounting Garrison Noreen Brewer Chapter 01Asif Hasan
This document summarizes key concepts from Chapter 1 of a managerial accounting textbook. It discusses the four functions of management: planning, organizing, directing/motivating, and controlling. For planning, it describes identifying alternatives and selecting plans to further organizational objectives. For controlling, it discusses ensuring plans are followed using performance reports. It also outlines concepts like just-in-time systems, total quality management, and process reengineering that are part of the changing business environment faced by managers. Finally, it discusses guidelines from the Institute of Management Accountants for ethical behavior by management accountants.
Citibank was founded in 1812 and is currently the largest bank in the US and one of the largest in the world. It is headquartered in New York City and has a presence in over 120 countries. Citibank has over 200 million customer accounts and provides various financial services including banking, credit cards, investment management, and wealth management. It aims to offer excellent customer service globally through strategic focus on productivity, efficient use of capital, technology, and client relationships.
The document provides an overview of IAS 36 Impairment of Assets. Key points include:
1) IAS 36 provides guidance for determining when the carrying amount of an asset exceeds its recoverable amount and an impairment loss must be recognized. It excludes certain assets and requires annual impairment testing of goodwill and indefinite-lived intangible assets.
2) An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use.
3) Impairment losses are allocated first to reduce the carrying amount of goodwill allocated to
This presentation provides an understanding of what financial modelling is and how it is used. Moreover it covers the basic approach for creating financial models and utilising them as needed.
Strategies of M&S, Problems, Marketing strategies, SWOT, ECG matrix, Positioning chart, etc!
Enough to make a quick school presentation or a basic skeleton to add further information
The document discusses the accounting procedures for business combinations, including acquisition of a controlling interest in another company through either purchasing the company's stock or net assets. It explains how to record the acquisition transaction on the parent company's books and prepare consolidation working papers and consolidated financial statements by eliminating entries between the parent and subsidiary. The consolidated financial statements present the financial position, results of operations, and cash flows of the parent company and its subsidiary as a single economic entity.
Here are my thoughts on your questions:
1. The need for Unilever to have separate legal identities but operate as a single entity was to maintain the original structures of Lever Brothers and Margarine Unie when they merged. Having separate parent companies allowed them to respect the original legal structures while integrating operations. Unilever plc and nv could potentially fuse in the future if they determine a single legal structure provides more benefits than the current dual structure.
2. The frequent restructuring at Unilever was needed to adapt the organizational structure and strategy to changing competitive dynamics. The world and consumer goods industry was evolving rapidly, so Unilever had to continuously transform to remain fit for the new market environments.
3. Pan
Wal-Mart sourced $750 million in seafood annually by 2007, with its seafood business growing 25% per year. However, global fisheries output had declined significantly. Wal-Mart's vice president of seafood and deli believed ensuring a sustainable seafood supply was the biggest long-term issue. In response, Wal-Mart adopted a sustainability strategy in 2005 focused on 100% renewable energy, zero waste, and only selling environmentally sustainable products. The company worked to certify its seafood through the MSC program and aimed to address critics who argue its sustainability initiatives deflect from needed workplace and environmental policy changes.
This document provides an overview of activity-based management (ABM) and its related concepts. It begins with learning objectives for the chapter and questions to consider. It then defines ABM and explains its relationship to activity-based costing, using a two-dimensional model. Key aspects of ABM covered include implementation, activity identification, responsibility accounting, and performance measurement. Process value analysis focuses on accountability for activities rather than costs. Customer and supplier costing apply ABM principles to identify true costs of relationships. Performance is assessed using both financial and non-financial measures.
This document provides an overview of activity-based management (ABM) and discusses how to successfully implement ABM. It begins by explaining the rationale for ABM and how it differs from activity-based costing (ABC) in its focus on management and improvement, not just cost analysis. The document then outlines several key uses and benefits of ABM, including strategic decision making, operations analysis, and process improvement. It also discusses common pitfalls in ABM implementation and provides best practices. The overall aim is to help management accountants and others understand and apply ABM concepts and techniques.
IND AS 16 provides guidance on accounting for plant, property and equipment (PPE). Key points include:
- An asset must meet the definition of a PPE to be classified as such, which includes being held for use in production, rental or administration with a useful life of more than 12 months.
- Initial recognition of a PPE involves capitalizing all costs required to bring the asset to working condition. Special cases like barter transactions also have specific guidance.
- Subsequent expenditures are generally expensed unless increasing the life or efficiency of the asset. Major replacements are capitalized by adjusting the carrying value.
- PPE can be carried at cost or revaluation model with periodic revaluations and accounting for
A Project Work on “A Study on Cash Flow Statement Analysis- at Penna Cement ...ijtsrd
Digital payments are gradually replacing physical cash transactions. In other words, e payment systems or cashless transactions make up digital payments in the online platform, and online payments are widely used as they are perceived to be easy, quick, and comfortable. Digitalization is the key for future growth of the Indian economy. In order to make this into reality, the Indian government and e payment service providers banks are establishing numerous awareness programs to bring e payment systems into the hands of the people in India. Mothikari Prathibha Bai | Dr. B. C Lakshmanna "A Project Work on “A Study on Cash Flow Statement Analysis- at Penna Cement Industries Ltd" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45204.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45204/a-project-work-on-%E2%80%9Ca-study-on-cash-flow-statement-analysis--at-penna-cement-industries-ltd/mothikari-prathibha-bai
The document discusses balance sheet analysis. It defines a balance sheet as a financial statement that presents the assets and liabilities of a company or individual. There are three main methods of balance sheet analysis: vertical analysis, which analyzes a single period statement; horizontal analysis, which compares data sets over two or more periods; and ratio analysis, which uses ratios to compare financial metrics to benchmarks. Common ratios examined in balance sheet analysis include liquidity, capital structure, profitability, and activity ratios.
STRATEGIC PLAN OF BIG BILLION DAY
EFFECT OF BIG BILLION DAY
IMPACT OF BIG BILLLION DAY ON BIG BILLION DAY
CUSTOMER REACTION TOWARDS BIG BILLION DAY
FLIPKART AFTER BIG BILLION DAY
SITUATIONAL ANALYSIS OF FLIPKART
CAMPAIGN OBJECTIVE
CAMPAIGN STRATEGY
ACHIEVEMENTS OF BIG BILLION DAY
Here are my thoughts on these questions:
1. If I had 1 million euros to invest for 20 years, I would invest in a solar power company rather than an oil company or wind energy company. Solar power is one of the fastest growing renewable energy technologies and has significant potential for further cost reductions and scaling up over the next 20 years. Oil companies face challenges from transition away from fossil fuels to meet climate goals. While wind is also growing, solar has fewer geographical constraints and is modular, allowing more distributed deployment. First Solar in particular seems well positioned as a technology and cost leader currently.
2. Given changes in the renewable energy market and First Solar's strong position established in the US through vertical integration, I don't think they
CATERPILLAR Mini Case from Marketing Management by Kotler as a part of Summer Internship under Professor Sameer Mathur, IIM Lucknow.
By Aravind M, IIT Madras
The document summarizes IFRS 3 Business Combinations. It outlines that IFRS 3 specifies that all business combinations must be accounted for using the purchase method. It defines key terms like business, acquisition date, and cost of a business combination. It describes how to identify the acquirer, measure assets and liabilities at fair value on the acquisition date, and account for goodwill and negative goodwill. Significant differences from Indian GAAP are also highlighted.
The document provides information about retail management and the retail industry in India. It discusses key topics like:
1. Retailing encompasses the selling of goods and services to consumers for personal use and is the largest stage in distribution. Major retailers like Walmart are leading companies globally in terms of sales.
2. The Indian retail industry is one of the most dynamic industries and accounts for 10% of GDP and 8% of employment. Organized retail is expected to double to $1 trillion by 2020 driven by income growth, urbanization, and attitude shifts.
3. New technologies are improving retail productivity while there are also opportunities to start retail businesses in India. However, retailers face challenges from economic weakness impacting
IAS 1 provides the requirements for presenting general purpose financial statements to ensure comparability. It sets out guidelines for the structure of financial statements and minimum requirements for content. Financial statements must include a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. Notes to the financial statements must also be presented. IAS 1 specifies the components that must be presented in each financial statement and note disclosure requirements.
International Business Machine (IBM) has experienced many ups and downs over its long history since 1910. [1] Key factors in IBM's recent success include its well-known brand name, global distribution capabilities, and ability to change its organization when technology changes. [2] IBM's plans to solve some of the world's most challenging problems may succeed because it hires scientists, engineers, and consultants, invests $50 billion in R&D with 30% for long-term research. [3] IBM's biggest competitors today are technology and consulting firms related to hardware and software like HP and Accenture. However, risks to IBM's current strategy include low success rates, R&D becoming obsolete, inability to
This document provides information about cash budgets, including what they are, their main functions, and factors that affect them. It then includes an example cash budget for a company called Box Ltd. over a 9-month period from June to December 2008. The budget shows expected cash receipts from sales, additional sources of cash, and expected cash payments for items like purchases, expenses, taxes, and capital expenditures. It calculates the expected cash balance at the end of each month. Cash budgets are important planning tools that help ensure a business has sufficient cash flow to cover expenses and identifies times when additional financing may be needed.
Managerial Accounting Garrison Noreen Brewer Chapter 01Asif Hasan
This document summarizes key concepts from Chapter 1 of a managerial accounting textbook. It discusses the four functions of management: planning, organizing, directing/motivating, and controlling. For planning, it describes identifying alternatives and selecting plans to further organizational objectives. For controlling, it discusses ensuring plans are followed using performance reports. It also outlines concepts like just-in-time systems, total quality management, and process reengineering that are part of the changing business environment faced by managers. Finally, it discusses guidelines from the Institute of Management Accountants for ethical behavior by management accountants.
Citibank was founded in 1812 and is currently the largest bank in the US and one of the largest in the world. It is headquartered in New York City and has a presence in over 120 countries. Citibank has over 200 million customer accounts and provides various financial services including banking, credit cards, investment management, and wealth management. It aims to offer excellent customer service globally through strategic focus on productivity, efficient use of capital, technology, and client relationships.
The document provides an overview of IAS 36 Impairment of Assets. Key points include:
1) IAS 36 provides guidance for determining when the carrying amount of an asset exceeds its recoverable amount and an impairment loss must be recognized. It excludes certain assets and requires annual impairment testing of goodwill and indefinite-lived intangible assets.
2) An impairment loss is recognized when the recoverable amount of an asset or cash-generating unit is less than its carrying amount. The recoverable amount is the higher of an asset's fair value less costs to sell or its value in use.
3) Impairment losses are allocated first to reduce the carrying amount of goodwill allocated to
This presentation provides an understanding of what financial modelling is and how it is used. Moreover it covers the basic approach for creating financial models and utilising them as needed.
Strategies of M&S, Problems, Marketing strategies, SWOT, ECG matrix, Positioning chart, etc!
Enough to make a quick school presentation or a basic skeleton to add further information
The document discusses the accounting procedures for business combinations, including acquisition of a controlling interest in another company through either purchasing the company's stock or net assets. It explains how to record the acquisition transaction on the parent company's books and prepare consolidation working papers and consolidated financial statements by eliminating entries between the parent and subsidiary. The consolidated financial statements present the financial position, results of operations, and cash flows of the parent company and its subsidiary as a single economic entity.
Here are my thoughts on your questions:
1. The need for Unilever to have separate legal identities but operate as a single entity was to maintain the original structures of Lever Brothers and Margarine Unie when they merged. Having separate parent companies allowed them to respect the original legal structures while integrating operations. Unilever plc and nv could potentially fuse in the future if they determine a single legal structure provides more benefits than the current dual structure.
2. The frequent restructuring at Unilever was needed to adapt the organizational structure and strategy to changing competitive dynamics. The world and consumer goods industry was evolving rapidly, so Unilever had to continuously transform to remain fit for the new market environments.
3. Pan
Wal-Mart sourced $750 million in seafood annually by 2007, with its seafood business growing 25% per year. However, global fisheries output had declined significantly. Wal-Mart's vice president of seafood and deli believed ensuring a sustainable seafood supply was the biggest long-term issue. In response, Wal-Mart adopted a sustainability strategy in 2005 focused on 100% renewable energy, zero waste, and only selling environmentally sustainable products. The company worked to certify its seafood through the MSC program and aimed to address critics who argue its sustainability initiatives deflect from needed workplace and environmental policy changes.
This document provides an overview of activity-based management (ABM) and its related concepts. It begins with learning objectives for the chapter and questions to consider. It then defines ABM and explains its relationship to activity-based costing, using a two-dimensional model. Key aspects of ABM covered include implementation, activity identification, responsibility accounting, and performance measurement. Process value analysis focuses on accountability for activities rather than costs. Customer and supplier costing apply ABM principles to identify true costs of relationships. Performance is assessed using both financial and non-financial measures.
This document provides an overview of activity-based management (ABM) and discusses how to successfully implement ABM. It begins by explaining the rationale for ABM and how it differs from activity-based costing (ABC) in its focus on management and improvement, not just cost analysis. The document then outlines several key uses and benefits of ABM, including strategic decision making, operations analysis, and process improvement. It also discusses common pitfalls in ABM implementation and provides best practices. The overall aim is to help management accountants and others understand and apply ABM concepts and techniques.
Strategy Focused Planning System Beyond Traditional BudgetingKenny Ong
ABF Financial Controllers Conference
Strategy Foc used Planning System beyond Traditional Budgeting
• What is strategy
• What is a strategic plan
• How to convert a strategic concept into an actionable plan with a realistic budget
• Overview of the mechanism for developing a strategic budget
The document discusses activity-based costing (ABC) and activity-based management (ABM). It provides examples of how ABC can more accurately assign costs in a manufacturing company. ABC involves identifying key activities, tracing costs to those activities, and assigning costs to cost objects like products using cost drivers. This provides more accurate product costs than a traditional single-rate system. ABM then uses the ABC information for decisions to improve profits.
Activity based management (ABM) helps managers improve operations and reduce costs based on activity-based costing (ABC) data. The first step is identifying areas needing improvement. ABM analysis can assist with pricing decisions, product substitution, redesigning processes, and process improvements like reducing setup times. A strategic view using ABM may find overall profits peak then decline as products and customers increase, especially with diverse indirect costs. Customers can be viewed quadratically - upper left are highly profitable and easy to serve, while lower right are problematic and should be reanalyzed or eliminated. Other ABM actions include eliminating products or excess capacity entirely, or focusing facilities.
Собрание схем по методологии калькулирования себестоимости - Activity-Based Costing. Также есть схемы по Activity-Based Budgeting. Схемы собраны в одну презентацию. Надеюсь, что поможет Вам мои подборки. Мой сайт: ivan-shamaev.ru
The document discusses various types of budgets and budgeting processes used by companies for planning and control purposes. It provides an example of Breakers Inc. preparing budgets for sales, production, materials, labor, expenses, and cash for the next few months. It demonstrates how the various functional budgets integrate together and provides budgeted financial statements to evaluate the company's expected financial performance.
Activity based costing ppt @ mba finaceBabasab Patil
Activity based costing (ABC) provides a more accurate method for assigning overhead costs than conventional costing methods. ABC identifies the activities performed in an organization and assigns costs to products based on their consumption of activities. It recognizes that resources are used to perform activities, not directly by products. ABC involves identifying activities, assigning resource costs to activities, defining activity drivers, and calculating activity costs to determine the full cost of products and services. ABC provides managers with more accurate cost information to improve process efficiency.
Activity based costing & activity based managementPiyush Gaur
The document discusses activity based costing (ABC) and how it addresses limitations of traditional costing methods. It explains that ABC allocates overhead costs to products based on multiple cost drivers like direct labor hours, machine hours, and number of purchase orders rather than a single driver. This provides a more accurate reflection of how overhead resources are consumed. The document provides an example to illustrate how ABC can allocate overhead costs differently than traditional methods based on a single driver.
Activity-based costing (ABC) assigns costs to products by tracing expenses to activities. Resources are spent on activities, which are consumed by cost objects like products. The ABC model involves 5 steps: 1) identify resources, 2) identify activities, 3) identify cost objects, 4) determine resource drivers to link resources to activities, and 5) determine activity drivers to link activities to cost objects. This allows costs to be traced from resources to activities to cost objects to determine the actual costs of products and services.
Activity based costing is considered to be useful only for Manufacturing Organizations whereas reality is that it is equally usefull to Service providers
Activity based costing (ABC) is a management accounting approach that allocates direct and indirect costs to products and services based on the activities and resources required to produce them. It provides more accurate cost and profit information than traditional methods by tracing costs to activities and then to cost objects using activity drivers. The key steps in ABC are identifying activities and resources, assigning resource costs to activities, and assigning activity costs to cost objects using activity consumption drivers. This allows management to understand cost and profitability at a more granular level and improve decision making.
Here are the steps to solve this problem:
2. The activity rates are computed as:
Assembling units: AED. 280,000/1,000 units = AED. 280 per unit
Processing orders: AED. 310,000/250 orders = AED. 1,240 per order
Supporting customers: AED. 100,000/100 customers = AED. 1,000 per customer
Activity-Based Costing System 26
3. The table showing overhead costs for VB's 80 units and 4 orders is:
Description Amount (AED.)
Direct materials cost (80 units x AED. 180) 14,400
Direct labor cost
Dokumen tersebut membahas tentang sistem kalkulasi biaya yang lebih akurat yaitu Activity Based Costing (ABC) dibandingkan sistem tradisional. ABC mengidentifikasi aktivitas yang terkait dengan biaya overhead dan mengalokasikan biaya tersebut berdasarkan penggunaan aktivitas. Dokumen ini memberikan contoh perhitungan biaya menggunakan sistem tradisional dan ABC untuk menunjukkan perbedaan hasilnya."
This document provides a guide for preparing a business budget. It outlines the key sections to include such as an executive summary, assumptions, SWOT analysis, marketing plan, and financial budget. The financial budget section includes templates for a sales/revenue budget, operating expenses budget, advertising & promotion budget, capital budget, and cashflow budget. It provides guidance on categorizing expenses, justifying costs, and specifying timing. The guide also includes templates for a Gantt chart and budgets & projections to plan activities and forecasts.
This document provides information about budgets and budgetary control. It defines what a budget is, explains different types of budgets such as sales, production, purchase budgets. It also discusses budgetary control which involves establishing budgets, comparing actual performance to planned budgets, analyzing variances, and taking corrective actions. Finally, it classifies budgets according to time, function, and flexibility. Key types discussed are sales, production, purchase, cash budgets and how they are prepared. Budgets help management plan, control operations, and evaluate performance.
The document outlines the process and components of budgeting for a company. It discusses preparing budgets for sales, production, direct materials, and direct labor. The sales budget estimates quarterly and annual sales. The production budget calculates required production levels based on sales and ending inventory goals. The direct materials budget determines raw material needs and purchases based on production needs and inventory targets. The direct labor budget calculates direct labor costs based on production quantities and labor requirements per unit.
The document provides information about budgets, budgeting, and budgetary control. It defines a budget as a financial plan for a defined period of time. It explains that budgets involve planning, forecasting, control, and evaluation. Budgets are used to measure success, control costs, provide targets, focus on underperforming areas, and encourage efficiency. The document also discusses different types of budgets like production, sales, purchase, personnel budgets. It covers the budgeting process and limitations of budgets. Finally, it explains zero base budgeting.
OP BudgetsOperating Budgets for 1st Qtr. 200XJanFebMarch1. Reve.docxhopeaustin33688
The document provides operating budgets for Brentware Ltd for the first quarter of 200X, including:
1. A revenues budget projecting sales of 1200, 2000, and 2400 units in January, February, and March at a selling price of $15 per unit.
2. A production budget projecting the units needed for planned sales plus required closing inventory, accounting for opening inventory.
3. A materials purchases budget projecting the kilograms of raw materials needed for projected production plus closing inventory, accounting for opening inventory. Purchases are projected to cost $15,200, $10,800, and $11,000 in January, February, and March, respectively.
The document discusses budgeting and the master budget. It provides information on the basic framework of budgeting including detail budgets that roll up into the master budget. It describes planning and control aspects of budgeting. Specific types of budgets are outlined like sales, production, materials, and cash budgets. Methods for developing budgets such as participative and continuous budgeting are covered. The advantages of budgeting and responsibility accounting are also summarized.
This document provides information about budgets and budgeting. It defines a budget as a financial plan for a defined period of time that shows expected income, expenses, and capital needed to achieve objectives. The document discusses the meaning and characteristics of budgets, the process of budgeting and budgetary control, advantages and disadvantages of budgets, types of government budgets including balanced, surplus, and deficit budgets, and components and types of budgets. It provides an overview of flexible budgets and features of the 2005-06 Indian government budget.
Budgeting is the formal process of preparing quantitative estimates of expected income and expenses for a defined period. A budget is a plan for how financial and operating resources will be used and obtained over a period. Budgets help management plan, motivate employees, evaluate performance, communicate goals, and coordinate activities. Common types of budgets include sales, production, materials purchasing, labor, and capital budgets. Budgets can be flexible or static depending on whether they vary with activity levels. Participative budgeting, frequent feedback, and realistic but challenging targets help ensure an effective budgeting process.
This document provides information about a group presentation on sales budgeting. It discusses key concepts like the meaning of a sales budget, objectives of sales budgeting, factors that influence sales budgets, and the importance and process of preparing a sales budget. The sales budget is the first component of the master budget and estimates future revenue and expenses for the sales department. It depends on sales forecasting and considers various internal and external factors.
The document discusses operational budgeting and the budgeting process. It provides examples of how a company named Ellis Magnet Co. prepares budgets for sales, production, materials purchases, direct labor costs, and manufacturing overhead for the months of April, May and June. The budgets are interrelated and based on estimated sales, production needs, material and labor requirements, and fixed and variable overhead costs. The examples demonstrate how operational budgets are developed to coordinate activities and evaluate performance.
The document discusses operational budgeting and the budgeting process. It provides examples of how a company named Ellis Magnet Co. prepares budgets for sales, production, materials purchases, direct labor costs, and manufacturing overhead for the months of April, May and June. The budgets are interrelated and based on estimated sales, production needs, material requirements, labor hours, and overhead costs. The examples demonstrate how the various functional budgets feed into an overall master budget for the company.
This course provides a basic understanding of preparing financial plans and budgets. It discusses how to create a sales forecast, production budget, materials budget, labor budget, and overhead budget. These detail budgets are used to create a budgeted income statement and balance sheet. The income statement shows budgeted revenues, costs, expenses, and net income. The balance sheet estimates account balances and shows whether additional external financing is required to support the financial plan.
The document discusses different types of budgets that corporations use, including strategic plans, long-range plans, capital budgets, and master budgets. Master budgets summarize all planned activities and include sales, purchases, cost of goods sold, operating expenses, and income budgets. Budgets help managers coordinate efforts, provide performance expectations, and aid in planning and evaluation.
The document provides information about budgeting and budgetary control. It defines budgeting as a detailed financial plan prepared in advance to help identify monetary and physical units of future operations. Budgetary control involves using budgets as a means of control by establishing budgets, fixing executive responsibilities, and comparing actual performance to planned performance. The document also discusses types of budgets, zero-base budgeting, flexible budgeting, and provides an example budget calculation.
The document provides information about budgeting and budgetary control. It defines budgeting as a detailed financial plan prepared in advance to help identify monetary and physical units of future operations. Budgetary control involves using budgets as a means of control by establishing budgets, fixing executive responsibilities, and comparing actual performance to planned performance. The document discusses key issues in budgeting like fixing budget periods and responsibilities. It also covers different types of budgets and concepts like zero-base budgeting.
The document discusses concepts and processes related to budgeting. It covers topics such as the definition of budgeting, advantages and disadvantages of budgeting, uses of budgets, budgeting tips and tricks, types of budgets including capital, sales, cash, production, expense, labor budgets. It also discusses ratio analysis, budgeting policies and procedures, the budgeting process, and getting a budget approved.
- A budget is a financial plan for anticipated expenses. Budgetary control involves preparing budgets, comparing actual to budgeted figures, and addressing deviations to improve planning and coordination.
- The objectives of budgetary control include planning income/expenses, controlling costs, coordinating activities, establishing accountability, and improving efficiency.
- Budgets can be classified by time (long, short, current), flexibility (fixed vs flexible), and function (sales, production, materials, labor, overhead). Zero-base budgeting periodically re-evaluates budget needs rather than incremental changes.
Measuring the Roi of Planning Software Boston June 2012Ben Lamorte
It was a small group of about 15 FP&A pros gathering around the conference room at the Boston Hilton. We analyzed conditions that suggest it is better to stick with spreadsheets for budgeting and planning. Then we looked at cases where it is a "gray area" as well as "no brainer" cases for replacing spreadsheets based on estimating the ROI of implementing a dedicated planning application.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
3. Purposes of Budgeting Systems
Budget Planning
a detailed plan, Facilitating
expressed in Communication and
quantitative terms, Coordination
that specifies how Allocating Resources
resources will be Controlling Profit and
acquired and used Operations
during a specified Evaluating Performance
period of time. and Providing Incentives
4. Types of Budgets
Detail
Budget
Detail
Materials
Budget
Detail
Production
Budget
Master
Budget
Covering all Sales
phases of
a company’s
operations.
5. Types of Budgets
Income
Statement
Budgeted
Financial
Statements
Balance Statement of
Sheet Cash Flows
6. Types of Budgets
Capital budgets with acquisitions
Capital budgets with acquisitions
that normally cover several years.
that normally cover several years.
Financial budgets with financial
Financial budgets with financial
resource acquisitions.
resource acquisitions.
Long Range Budgets
Continuous or
1999Rolling Budget2000 2001 2002
This budget is usually a twelve-month
This budget is usually a twelve-month
budget that rolls forward one month
budget that rolls forward one month
as the current month is completed.
as the current month is completed.
8. Sales of Services or Goods
Ending
Inventory Production
Budget Budget
Work in Process
and Finished
Goods
Ending Direct Direct Selling and
Overhead
Inventory Materials Labor Administrative
Budget Budget Budget Budget
Budget
Direct Materials
Cash Budget
Budgeted Income
Statement
Budgeted Balance
Sheet
Budgeted Statement
of Cash Flows
10. Activity-Based Costing versus
Activity-Based Budgeting
Resources
Resources Resources
Resources
Activity-Based
Activity-Based
Costing (ABC)
Costing (ABC)
Activities
Activities Activities
Activities
Activity-Based
Activity-Based
Cost objects: Budgeting (ABB)
Budgeting (ABB)
Cost objects: Forecast of products
Forecast of products
products and services
products and services and services to be
and services to be
produced, and
produced, and produced and
produced and
customers served.
customers served. customers served.
customers served.
12. Sales Budget
Breakers, Inc. is preparing budgets for the quarter
Breakers, Inc. is preparing budgets for the quarter
ending June 30.
ending June 30.
Budgeted sales for the next five months are:
Budgeted sales for the next five months are:
April
April 20,000 units
20,000 units
May
May 50,000 units
50,000 units
June
June 30,000 units
30,000 units
July
July 25,000 units
25,000 units
August
August 15,000 units.
15,000 units.
The selling price is $10 per unit.
The selling price is $10 per unit.
13. Sales Budget
April May June Quarter
Budgeted
sales (units) 20,000 50,000 30,000 100,000
Selling price
per unit $ 10 $ 10 $ 10 $ 10
Total
Revenue $ 200,000 $ 500,000 $ 300,000 $ 1,000,000
14. Production Budget
Sales Production
Budget Budget
d
e te
pl
Com
Production must be adequate to meet budgeted
sales and provide for sufficient ending inventory.
15. Production Budget
The management of Breakers, Inc. wants
The management of Breakers, Inc. wants
ending inventory to be equal to 20% of the
ending inventory to be equal to 20% of the
following month’s budgeted sales in units.
following month’s budgeted sales in units.
On March 31, 4,000 units were on hand.
On March 31, 4,000 units were on hand.
Let’s prepare the production budget.
Let’s prepare the production budget.
16. Production Budget
April May June Quarter
Sales in units 20,000
Add: desired
end. inventory
Total needed
Less: beg.
inventory
Units to be
produced
From sales
budget
17. Production Budget
April May June Quarter
Sales in units 20,000
Add: desired
end. inventory 10,000
Total needed 30,000
Less: beg.
inventory
Units to be
produced
18. Production Budget
April May June Quarter
Sales in units 20,000
Add: desired
end. inventory 10,000
Total needed 30,000
Less: beg.
inventory 4,000
Units to be
produced 26,000
March 31
ending inventory
19. Production Budget
April May June Quarter
Sales in units 20,000 50,000
Add: desired
end. inventory 10,000 6,000
Total needed 30,000 56,000
Less: beg.
inventory 4,000 10,000
Units to be
produced 26,000 46,000
20. Production Budget
April May June Quarter
Sales in units 20,000 50,000 30,000 100,000
Add: desired
end. inventory 10,000 6,000 5,000 5,000
Total needed 30,000 56,000 35,000 105,000
Less: beg.
inventory 4,000 10,000 6,000 4,000
Units to be
produced 26,000 46,000 29,000 101,000
21. Direct-Material Budget
•• At Breakers, five pounds of material are required
At Breakers, five pounds of material are required
per unit of product.
per unit of product.
•• Management wants materials on hand at the end
Management wants materials on hand at the end
of each month equal to 10% of the following
of each month equal to 10% of the following
month’s production.
month’s production.
•• On March 31, 13,000 pounds of material are on
On March 31, 13,000 pounds of material are on
hand. Material cost $.40 per pound.
hand. Material cost $.40 per pound.
Let’s prepare the direct materials budget.
Let’s prepare the direct materials budget.
26. Direct-Material Budget
July Production
Sales in units 25,000
Add: desired ending inventory 3,000
Total units needed 28,000
Less: beginning inventory 5,000
Production in units 23,000
June Ending Inventory
July production in units 23,000
Materials per unit 5
Total units needed 115,000
Inventory percentage 10%
June desired ending inventory 11,500
27. Direct-Labor Budget
• At Breakers, each unit of product requires 0.1 hours
of direct labor.
• The Company has a “no layoff” policy so all
employees will be paid for 40 hours of work each
week.
• In exchange for the “no layoff” policy, workers agreed
to a wage rate of $8 per hour regardless of the hours
worked (No overtime pay).
• For the next three months, the direct labor workforce
will be paid for a minimum of 3,000 hours per month.
Let’s prepare the direct labor budget.
33. Selling and Administrative
Expense Budget
•• At Breakers, variable selling and administrative
At Breakers, variable selling and administrative
expenses are $0.50 per unit sold.
expenses are $0.50 per unit sold.
•• Fixed selling and administrative expenses are
Fixed selling and administrative expenses are
$70,000 per month.
$70,000 per month.
•• The $70,000 fixed expenses include $10,000 in
The $70,000 fixed expenses include $10,000 in
depreciation expense that does not require a cash
depreciation expense that does not require a cash
outflows for the month.
outflows for the month.
37. Cash Receipts Budget
•• At Breakers, all sales are on account.
At Breakers, all sales are on account.
•• The company’s collection pattern is:
The company’s collection pattern is:
70% collected in the month of sale,
70% collected in the month of sale,
25% collected in the month following sale,
25% collected in the month following sale,
5% is uncollected.
5% is uncollected.
•• The March 31 accounts receivable balance of
The March 31 accounts receivable balance of
$30,000 will be collected in full.
$30,000 will be collected in full.
40. Cash Disbursement Budget
•• Breakers pays $0.40 per pound for its materials.
Breakers pays $0.40 per pound for its materials.
•• One-half of a month’s purchases are paid for in the
One-half of a month’s purchases are paid for in the
month of purchase; the other half is paid in the
month of purchase; the other half is paid in the
following month.
following month.
•• No discounts are available.
No discounts are available.
•• The March 31 accounts payable balance is
The March 31 accounts payable balance is
$12,000.
$12,000.
43. Cash Disbursement Budget
Breakers:
Breakers:
– Maintains a 12% open line of credit for $75,000.
– Maintains a 12% open line of credit for $75,000.
– Maintains a minimum cash balance of $30,000.
– Maintains a minimum cash balance of $30,000.
– Borrows and repays loans on the last day of the
– Borrows and repays loans on the last day of the
month.
month.
– Pays a cash dividend of $25,000 in April.
– Pays a cash dividend of $25,000 in April.
– Purchases $143,700 of equipment in May and
– Purchases $143,700 of equipment in May and
$48,300 in June paid in cash.
$48,300 in June paid in cash.
– Has an April 1 cash balance of $40,000.
– Has an April 1 cash balance of $40,000.
57. Cost of Goods Manufactured
April May June Quarter
Direct material:
Beg.material inventory $ 5,200 $ 9,200 $ 5,800 $ 5,200
Add: Materials purchases 56,000 88,600 56,800 201,400
Material available for use 61,200 97,800 62,600 206,600
Deduct: End. material inventory 9,200 5,800 4,600 4,600
Direct material used 52,000 92,000 58,000 202,000
Direct labor 24,000 36,800 24,000 84,800
Manufacturing overhead 56,000 76,000 59,000 191,000
Total manufacturing costs 132,000 204,800 141,000 477,800
Add: Beg. Work-in-process inventory 3,800 16,200 9,400 3,800
Subtotal 135,800 221,000 150,400 481,600
Deduct: End.Work-in-process inventory 16,200 9,400 17,000 17,000
Cost of goods manufactured $ 119,600 $ 211,600 $ 133,400 $ 464,600
58. Cost of Goods Sold
April May June Quarter
Cost of goods manufactured $ 119,600 $ 211,600 $ 133,400 $ 464,600
Add: Beg. finished-goods inventory 18,400 46,000 27,600 18,400
Cost of goods available for sale 138,000 257,600 161,000 483,000
Deduct: End. finished-goods inventory 46,000 27,600 23,000 23,000
Cost of goods sold $ 92,000 $ 230,000 $ 138,000 $ 460,000
59. Budgeted Income Statement
Cost of Budgeted
Goods Income
Manufact- d Statement
e te
uredpland
om
C Sold
After we complete the cost of goods manufactured
and sold schedules, we can prepare
the budgeted income statement for Breakers.
60. Budgeted Income Statement
Breakers, Inc.
Budgeted Income Statement
For the Three Months Ended June 30
Revenue (100,000 × $10) $ 1,000,000
Cost of goods sold 460,000
Gross margin 540,000
Operating expenses:
Selling and admin. expenses $ 260,000
Interest expense 838
Total operating expenses 260,838
Net income $ 279,162
61. Budgeted Statement of Cash Flows
April May June Quarter
Cash flows from operating activities:
Cash receipts from customers $ 170,000 $ 400,000 $ 335,000 $ 905,000
Cash payments:
To suppliers of raw material (40,000) (72,300) (72,700) (185,000)
For direct labor (24,000) (36,800) (24,000) (84,800)
For manufacturing-overhead expenditures (56,000) (76,000) (59,000) (191,000)
For selling and administrative expenses (70,000) (85,000) (75,000) (230,000)
For interest - - (838) (838)
Total cash payments (190,000) (270,100) (231,538) (691,638)
Net cash flow from operating activities $ (20,000) $ 129,900 $ 103,462 $ 213,362
Cash flows from investing activities:
Purchase of equipment - (143,700) (48,300) (192,000)
Net cash used by investing activities $ - $ (143,700) $ (48,300) $ (192,000)
Cash flows from financing activities:
Payment of dividends (25,000) - - (25,000)
Principle of bank loan 35,000 13,800 - 48,800
Repayment of bank loan - - (48,800) (48,800)
Net cash provided by financing activities $ 10,000 $ 13,800 $ (48,800) $ -
Net increase in cash $ (10,000) $ - $ 6,362 $ (3,638)
Balance in cash, beginning 40,000 30,000 30,000 40,000
Balance in cash. end of month $ 30,000 $ 30,000 $ 36,362 $ 36,362
62. Budgeted Balance Sheet
Breakers reports the following account balances
Breakers reports the following account balances
on June 30 prior to preparing its budgeted
on June 30 prior to preparing its budgeted
financial statements:
financial statements:
• Land -- $50,000
• Land $50,000
• Building (net) -- $148,000
• Building (net) $148,000
• Common stock -- $217,000
• Common stock $217,000
• Retained earnings -- $46,400
• Retained earnings $46,400
63. 25%of June
sales of
$300,000
11,500 lbs. at
$.40 per lb.
5,000 units at
$4.60 per unit.
66. Sales of Services or Goods
Ending
Inventory Production
Budget Budget
Work in Process
and Finished
Goods
When the interactions of the elements
Endingthe master budget are expressed as and
of Direct Direct Selling
Overhead
Inventory Materials Labor
Budget a set of mathematical relations,Administrative
Budget Budget Budget it Budget
becomes a financial planning model
Direct Materials
that can be used to answer “what if”
Cash Budget
questions about unknown variables.Income
Budgeted
Statement
Budgeted Balance
Sheet
Budgeted Statement
of Cash Flows
68. Budget Administration
The Budget Committee is a standing
committee responsible for . . .
overall policy matters relating to the budget.
overall policy matters relating to the budget.
coordinating the preparation of the budget.
coordinating the preparation of the budget.
69. E-Budgeting
Employees throughout an organization
can submit and retrieve budget
information electronically. This tends to
streamline the entire budgeting process.
70. Firewalls and Information
Security
Budget information is extremely sensitive and
confidential. A firewall is a computer or
router placed between a company’s internal
network and the internet to control all
information between the outside world and
the company’s local network.
71. Zero-Base Budgeting
To receive funding during the budgeting
process, each activity must be justified in
terms of its continued usefulness.
72. International Aspects of Budgeting
Firms with international operations face
Firms with international operations face
special problems when preparing a
special problems when preparing a
budget.
budget.
Fluctuations in foreign currency exchange
Fluctuations in foreign currency exchange
rates.
rates.
High inflation rates in some foreign countries.
High inflation rates in some foreign countries.
Differences in local economic conditions.
Differences in local economic conditions.
74. Budgeting Product Life-Cycle
Costs
Product planning
Product planning
and concept
and concept
Design.
Design.
Distribution
Distribution Preliminary
Preliminary
and customer
and customer design.
design.
service.
service.
Detailed design
Detailed design
Production.
Production. and testing.
and testing.
76. Behavioral Impact of Budgets
Budgetary Slack: Padding the Budget
People often perceive that their performance will
look better in their superiors’ eyes if they can
“beat the budget.”
77. Participative Budgeting
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Flow of Budget Data
A budget is a detailed plan, expressed in quantitative terms, that specifies how resources will be acquired and used during a specified period of time. The procedures used to develop a budget constitute a budgeting system. Budgeting systems have five primary purposes: (1) planning, (2) facilitating communication and coordination, (3) allocating resources, (4) controlling profit and operations and (5) evaluating performance and providing incentives. (LO1)
Different types of budgets serve different purposes. A master budget, or profit plan, is a comprehensive set of detailed budgets covering all phases of an organization’s operations for a specified period of time. (LO1)
Budgeted financial statements, often called pro forma financial statements, show how the organization’s financial statements will appear at a specified time if operations proceed according to plan. Budgeted financial statements include a budgeted income statement, a budgeted balance sheet, and a budgeted statement of cash flows. (LO1)
A capital budget is a plan for the acquisition of capital assets, such as buildings and equipment. A financial budget is a plan that shows how the organization will acquire its financial resources, such as through the issuance of stock or incurrence of debt. Budgets are developed for specific time periods. Short-range budgets cover a year, a quarter, or a month, whereas long-range budgets cover periods longer than a year. Rolling budgets are continually updated by periodically adding a new incremental time period, such as a quarter, and dropping the period just completed. Rolling budgets are also called revolving budgets or continuous budgets . (LO1)
The master budget comprises many separate budgets, or schedules, that are interdependent. Based on the sales budget, a company develops a set of operational budgets that specify how its operations will be carried out to meet the demand for its goods or services. A manufacturing company develops a production budget, which shows the number of product units to be manufactured and ending inventory budgets. From the production budget, a manufacturer develops budgets for the direct materials, direct labor, and overhead that will be required in the production process. A budget for selling and administrative expenses also is prepared. The operational portion of the master budget is similar in a merchandising firm, but instead of a production budget for goods, a merchandiser develops a budget for merchandise purchases. A merchandising firm will not have a budget for direct materials. Based on the sales budget for its services, a service industry firm develops a set of budgets that show how the demand for those services will be met. Every business prepares a cash budget. This budget shows expected cash receipts, as a result of selling goods or services, and planned cash disbursements, to pay the bills incurred by the firm. The final portion of the master budget includes a budgeted income statement, a budgeted balance sheet, and a budgeted statement of cash flows. (LO2)
Applying ABC concepts to the budgeting process yields activity-based budgeting or ABB. Under ABB, the first step is to specify the products or services to be produced and the customers to be served. Then the activities that are necessary to produce these products and services are determined. Finally, the resources necessary to perform the specified activities are quantified. Conceptually, ABB takes the ABC model and reverses the flow of the analysis. ABC assigns resource costs to activities, and then it assigns activity costs to products and services produced and customers served. ABB, on the other hand, begins by forecasting the demand for products and services as well as the customers to be served. These forecasts then are used to plan the activities for the budget period and budget the resources necessary to carry out the activities. (LO3)
Breakers, Inc. is preparing budgets for the quarter ending June 30. The unit sales are projected for the months of April through August. The selling price per unit is budgeted at $10. (LO4)
The projected units are multiplied by $10 for each month to determine the budgeted revenue for the months of April, May, June and the quarter. (LO4)
Now that the sales budget is complete, the production budget can be prepared. The purpose of the production budget is to ensure that production meets budgeted sales and provides sufficient ending inventory. (LO4)
Management has determined that the ending inventory should be equal to 20% of the sales for the following month. At the end of March, there were 4,000 units on hand. (LO4)
The number of units projected to be sold in the first month is obtained from the sales budget. (LO4)
The desired ending inventory is calculated by multiplying the projected sales for the next month, May, by 20%. This is added to the projected sales to determine the units needed for April. (LO4)
The ending inventory for the previous month, March, is deducted from the amount needed to determine the number of units that must be produced. (LO4)
The ending inventory for the first month, April, becomes the beginning inventory for the second month. The May and June production budget are prepared in the same manner as April. (LO4)
Sales in units for the quarter is the sum of April, May and June sales. Since the end of June is also the end of the quarter, the ending inventory for the quarter is the same as the ending inventory for June. Since the beginning of April is also the beginning of the quarter, the beginning inventory for the quarter is the same as April’s beginning inventory. Total units needed for the quarter is the sum of the sales units and the ending inventory. The beginning inventory is subtracted from the total units needed to arrive at the units to be produced for the quarter. (LO4)
Five pounds for materials are required to produce on unit. Management has determined that direct materials ending inventory should be 10% of the next month’s production. There are 31,000 pounds of direct materials in March’s ending inventory. The cost is 40 cents per pound. (LO4)
The first row in the direct materials budget is the units to be produced each month and for the quarter. This information is obtained from the production budget. (LO4)
For each month, the units to be produced needs to be multiplied by 5 pounds to determine the amount of direct materials needed in each month. The ending inventory for April is 10% of May’s direct material needs. The desired ending inventory for April is added to the production needs for April. (LO4)
The beginning inventory is subtracted from the total direct material needed for the month to arrive at the materials to be purchased. (LO4)
The calculations are the same for each month. As in the production budget, the ending inventory for the quarter is the same as the ending inventory for June and the beginning inventory for the quarter is the same as the beginning inventory in April. (LO4)
The ending direct material inventory for June requires a bit more explanation. The projections for July must be expanded upon to determine the production budget for July, which will provide the information necessary to calculate the materials needed for June’s ending inventory. (LO4)
Each unit can be produced in one tenth of an hour. Breaker’s pays employees for 40 hours each week. The wage rate is $8 per hour and there is no overtime pay. Management has projected that direct laborers will be paid for a minimum of 3,000 hours per month for the next three month. (LO4)
The direct labor budget starts with the units to be produced from the production budget. (LO4)
The production for each month and the quarter is multiplied by one tenth of an hour to determine the labor hours required. (LO4)
The labor hours required is compared to the guaranteed of labor hours. The labor hours to be paid is the greater of the two for each month. The labor hours to be paid for the quarter is the sum of the labor hours paid for the three months. (LO4)
The labor hours paid is multiplied by the $8 wage rate to determine the total direct labor cost. (LO4)
The manufacturing-overhead budget shows the cost of overhead expected to be incurred in the production process during the budget period. Breaker’s manufacturing overhead budget lists the expected cost of each overhead item by month. At the bottom of the schedule, the total budgeted overhead for each month is shown. (LO4)
Management at Breaker’s has projected the variable selling and administrative expenses to by 50 cents per unit sold. The fixed selling and administrative costs are projected to be $70,000 per month. $10,000 of the fixed expenses is for depreciation, which does not require a cash outflow. This information will be important when the cash disbursements budget is prepared. (LO4)
Once again, we start with the units sales for each month and the quarter from the sales budget. (LO4)
The sales for each month and the quarter are multiplied by the variable selling and administrative cost rate of 50 cents to determine the variable S&A costs. This is added to the fixed S&A costs of $70,000 for each month to arrive at the total S&A expenses for each month. Don’t forget that the fixed S&A expenses for the quarter is the sum of fixed S&A expenses for the three months. (LO4)
The noncash expenses are deducted from the total expenses to determine the amount of cash disbursements required for each month and the quarter for selling and administrative expenses. (LO4)
All sales at Breakers are on account. The company has experienced the following collection pattern: 70% collected in the month of the sale, 25% is collected in the month following the sale, 5% becomes uncollectible. The accounts receivable balance at the end of March is $30,000 and is expected to be collected in full in April. (LO4)
During April, the remained of March’s sales will be collected, which is the $30,000 accounts receivable balance on March 31. 70% of April’s sales are also expected to be collected in April. Therefore, the total collections expected in April is $170,000. (LO4)
May’s collections will be 25% of April’s sales and 70% of May’s sales. June’s collections will be 25% of May’s sales and 70% of June’s sales. The collections for the quarter is the sum of the collections for the three months. (LO4)
Breakers pays 40 cents per pound for its materials. The company pays for half of its materials purchases in the month of the purchase and the remaining half is paid for in the following month. There are no discounts available to Breakers. The balance in accounts payable is $12,000 at the end of March. (LO4)
The purchases for each month is multiplied by 40 cents to determine the cost of materials purchased for the month. This cost is then multiplied by 50%. 50% of April’s materials purchases will be paid for in April, the remaining 50% will be paid in May. This pattern is followed in May and June to determine the cash disbursements for materials for each month. (LO4)
The cash disbursements for each month are added together to determine the cash disbursements for the quarter. (LO4)
Breakers will also make cash disbursements for payments on an open line of credit, loans, a cash dividend, and equipment purchases. All borrowings and repayments occur on the last day of each month. (LO4)
The cash budget is a combination of the cash receipts budget, the cash disbursements for materials budget and other cash disbursements required, such as for direct materials, overhead, etc. The cash budget starts with the beginning cash balance for April. This is also the beginning cash balance for the quarter. The cash collections for the month are found on the cash receipts budget and added to the beginning cash balance to arrive at the total cash available. (LO4)
The cash outflow for materials is found on the cash disbursements budget. (LO4)
The cash outflow for wages can be found on the direct labor budget. (LO4)
Cash outflow requirements for manufacturing overhead can be found on the overhead budget. (LO4)
Cash outflow for S&A costs can be found on the selling and administrative expense budget. (LO4)
There are no equipment purchases made in April, but there are dividends paid. The disbursements are totalled and them subtracted from the total cash available for the month. In April, there is a cash deficit. (LO4)
Because there is a cash deficit, Breakers must borrow $35,000 to maintain the $30,000 minimum balance required. The ending cash balance for April becomes the beginning cash balance for May. (LO4)
Cash collections and disbursements are determined in the same manner for the month of May. Although there is not a cash deficit at the end of May, the $16,200 available is still below the $30,000 minimum balance requirement by $13,800. (LO4)
Therefore, Breakers must borrow an additional $13,800 at the end of May to have a $30,000 cash balance for the beginning of June. (LO4)
June’s collections and disbursements budget follows the same format. There will be enough cash at the end of June to repay the amounts borrowed in April and May plus the 12% interest. (LO4)
The $35,000 borrowed at the end of April requires a $700 interest payment and the $13,800 borrowed at the end of May requires an interest payment of $138. The total to be repaid for principle and interest is $49,638. The ending cash balance for June is also the ending cash balance for the quarter. (LO4)
The beginning cash balance for the quarter is April’s beginning cash balance. The cash collections for the quarter are added to determine the total cash available for the quarter. Each item’s cash disbursements are totalled for the quarter and then added together to determined the total cash disbursements for the quarter. The disbursements for the quarter are then deducted from the collections for the quarter. There is a $37,200 cash surplus for the quarter. (LO4)
The borrowings for the quarter is the sum of the borrowings in April and May. The repayments and interest for the quarter occurred in June. The ending cash balance for the quarter is the ending cash balance for June since the end of June is also the end of the quarter. (LO4)
The cost of goods manufactured schedule is prepared from the direct materials budget, the direct labor budget and the overhead budget. The ending work-in-process inventory amounts are estimates provided by management. The amounts for direct materials are in dollars, not units. The direct materials beginning inventory, purchases and ending inventory amounts were taken from the direct materials budget. These amounts were multiplied by the cost of 40 cents per pound to arrive at the dollar amounts. (LO4)
The cost of goods sold schedule starts where the cost of goods manufactured left off. The cost of goods manufactured at the beginning of April can be divided by the units manufactured, 26,000, to arrive at a unit cost of $4.60. The 4,000 units in finished goods inventory at the beginning of April is multiplied by the unit cost to determine the beginning inventory cost. The ending inventory for each month is also multiplied by $4.60 to determine the cost of the ending inventory. Remember, the ending inventory for one month becomes the beginning inventory for the following month. The beginning inventory for the quarter is the same as the beginning inventory for April and the ending inventory for the quarter is the same as the ending inventory for June. (LO4)
Now that the cost of goods manufactured and cost of goods sold schedules are complete, the budgeted income statement can be prepared. (LO4)
A budgeted income statement for the quarter ending June 30 can now be prepared for Breakers. Revenue is taken from the sales budget. Cost of goods sold is taken from the cost of goods sold schedule. Gross margin is revenue less cost of goods sold. The operating expenses is taken from the selling and administrative expense budget and the cash budget. Net income is gross margin less total operating expenses. (LO4)
The information for the budgeted statement of cash flows can be taken from the cash budget. (LO4)
Account balances for property, plant and equipment and stockholders’ equity accounts are needed before preparing the budgeted balance sheet. (LO4)
The budgeted balance sheet is prepared for the date June 30. Cash is taken from the cash budget or the budgeted statement of cash flows. Accounts receivable is 25% of June sales. (Recall the collections pattern from the cash collections schedule.) The raw materials, work-in-process and finished goods inventory amounts can be taken from the cost of goods manufactured and costs of goods sold schedules. The amount for equipment can be taken from the cash disbursements budget or the budgeted statement of cash flows. (LO4)
The accounts payable balance is 50% of June’s purchases for direct materials. (Recall the cash disbursements pattern for direct materials.) The ending retained balance is the beginning balance plus net income less dividends paid. (LO4)
Managers must make assumptions and predictions in preparing budgets because organizations operate in a world of uncertainty. One way of coping with that uncertainty is to supplement the budgeting process with a financial planning model. A financial planning model is a set of mathematical relationships that express the interactions among the various operational, financial, and environmental events that determine the overall results of an organization’s activities. A financial planning model is a mathematical expression of all the relationships expressed in a master budget flow chart. In a fully developed financial planning model, all of the key estimates and assumptions are expressed as general mathematical relationships. Then the model is run on a computer many times to determine the impact of different combinations of these unknown variables. “What if” questions can be answered about such unknown variables as inflation, interest rates, the value of the dollar, demand, competitors’ actions, union demands in forthcoming wage negotiations, and a host of other factors. The widespread availability of personal computers and electronic-spreadsheet software has made financial planning models a more and more common management tool. (LO5)
In small organizations, the procedures used to gather information and construct a master budget are usually informal. In contrast, larger organizations use a formal process to collect data and prepare the master budget. Such organizations usually designate a budget director or chief budget officer, which is often the controller. A budget committee, consisting of key senior executives, often is appointed to advise the budget director during the preparation of the budget. This committee is responsible for policy matters relating to the budget and coordinating the preparation of the budget. The authority to give final approval to the master budget usually belongs to the board of directors. By exercising its authority to make changes in the budget and grant final approval, the board of directors can have considerable influence on the overall direction the organization takes. (LO6)
E-budgeting is an increasingly popular, Internet-based budgeting tool that can help streamline and speed up an organization’s budgeting process. The e in e-budgeting stands for both electronic and enterprisewide; employees throughout an organization, at all levels and around the globe, can submit and retrieve budget information electronically via the Internet. Managers in organizations using e-budgeting have found that it greatly streamlines the entire budgeting process. In the past, these organizations have compiled their master budgets on hundreds of spreadsheets, which had to be collected and integrated by the corporate controller’s office. (LO6)
Since most companies’ budget information is extremely sensitive and confidential, it is absolutely critical that adequate network security provisions are in place to keep unauthorized people from hacking into an organization’s budget database. A firewall is a computer or information router placed between a company’s internal network and the Internet to control and monitor all information between the outside world and the company’s local network. (LO6)
Zero-base budgeting is used in a wide variety of organizations. Under zero-base budgeting, the budget for virtually every activity in the organization is initially set to zero. To receive funding during the budgeting process, each activity must be justified in terms of its continued usefulness. The zero-base-budgeting approach forces management to rethink each phase of an organization’s operations before allocating resources. (LO6)
Firms with international operations face a variety of additional challenges in preparing their budgets. First, a multinational firm’s budget must reflect the translation of foreign currencies into U.S. dollars. Since almost all the world’s currencies fluctuate in their values relative to the dollar, this makes budgeting for those translations difficult. Although multinationals have sophisticated financial ways of hedging against such currency fluctuations, the budgeting task is still more challenging. Second, it is difficult to prepare budgets when inflation is high or unpredictable. While the United States has experienced periods of high inflation, some foreign countries have experienced hyperinflation, sometimes with annual inflation rates well over 100 percent. Predicting such high inflation rates is difficult and further complicates a multinational’s budgeting process. Finally, the economies of all countries fluctuate in terms of consumer demand, availability of skilled labor, laws affecting commerce, and so forth. Companies with offshore operations face the task of anticipating such changing conditions in their budgeting processes. (LO6)
A relatively recent focus of the budgeting process is to plan for all of the costs that will be incurred throughout a product’s life cycle, before a commitment is made to the product. Product life-cycle costs encompass the following five phases in a product’s life cycle: • Product planning and concept design. • Preliminary design. • Detailed design and testing. • Production. • Distribution and customer service. In order to justify a product’s introduction, the sales revenues it will generate over its life must be sufficient to cover all of these costs. Thus, planning these life-cycle costs is a crucial step in making a decision about the introduction of a new product. (LO7)
When a supervisor provides a departmental cost projection for budgetary purposes, there is an incentive to overestimate costs. When the actual cost incurred in the department proves to be less than the inflated cost projection, the supervisor appears to have managed in a cost-effective way. At least that is the perception of many managers, and, in the behavioral area, perceptions are what count most. These illustrations are examples of padding the budget. Budget padding means underestimating revenue or overestimating costs. The difference between the revenue or cost projection that a person provides and a realistic estimate of the revenue or cost is called budgetary slack. (LO8)
Most people will perform better and make greater attempts to achieve a goal if they have been consulted in setting the goal. The idea of participative budgeting is to involve employees throughout an organization in the budgetary process. Such participation can give employees the feeling that “this is our budget,” rather than the all-too-common feeling that “this is the budget you imposed on us.” While participative budgeting can be very effective, it also can have shortcomings. Too much participation and discussion can lead to uncertainty and delay. Also, when those involved in the budgeting process disagree in significant and irreconcilable ways, the process of participation can accentuate those differences. Finally, the problem of budget padding can be severe unless incentives for accurate projections are provided. (LO8)