Chapter 6 - Planning, the balanced scorecard, and budgeting. The goals of this chapter are: Describe the purposes, strategies, and approaches to budgeting; explain the process of revenue process planning and prepare the resulting budgets and schedules; discuss the process of conversion process planning and prepare the resulting budget; explain the process of expenditure process planning and prepare the resulting budgets and schedules. | Chapter 6 Planning, the Balanced Scorecard, and Budgeting Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 6- What are the Benefits of Budgeting? Planning Financial terms Communication and coordination Among and between departments/functions Resource allocation Scarce resources Evaluation and control Benchmarking 6- What are the Costs of Budgeting? Time and resource requirements Time consuming process Adaptability May miss opportunities Motivation and behavior Budgetary slack 6- What is the Difference between Mandated and Participatory Budgeting? Mandated Top down Based on standards Participatory Bottom up Based on “local” information 6- What is the Difference between Incremental and Zero-based Budgeting? Incremental Last year is the base Adjust for anticipated increases/decreases Zero-based Zero is the base Justify all activities and requests 6- How Is Revenue Process Planning Related to the Balanced Scorecard? Balanced scorecard Goals and objectives Measurable outcomes for activities Revenue process planning Planning activities Budget—financial goals 6- What are the Budgets that Result from Revenue Process Planning? Sales budget Units Dollars Cash receipts schedule When—collection patterns How much—sales discounts offered Uncollectible amounts 6- Revenue Budgets Continued Accounts receivable schedule Beginning balance Add sales Less cash received Less sales discounts Less uncollectible amounts Equals ending balance Marketing and distribution budget Expected costs of activities 6- How Is Conversion Process Planning Related to the Balanced Scorecard? Balanced scorecard Goals and objectives Measurable outcomes for activities Conversion process planning Planning activities Budget—financial goals 6- What is the Budget that Results from Conversion Process Planning? Production budget Number of units to sell Add desired ending inventory of finished goods Less beginning inventory of finished . | Chapter 6 Planning, the Balanced Scorecard, and Budgeting Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 6- What are the Benefits of Budgeting? Planning Financial terms Communication and coordination Among and between departments/functions Resource allocation Scarce resources Evaluation and control Benchmarking 6- What are the Costs of Budgeting? Time and resource requirements Time consuming process Adaptability May miss opportunities Motivation and behavior Budgetary slack 6- What is the Difference between Mandated and Participatory Budgeting? Mandated Top down Based on standards Participatory Bottom up Based on “local” information 6- What is the Difference between Incremental and Zero-based Budgeting? Incremental Last year is the base Adjust for anticipated increases/decreases Zero-based Zero is the base Justify all activities and requests 6- How Is Revenue Process Planning Related to the Balanced Scorecard? Balanced .
