Chapter 14 - Cost planning. After reading this chapter, you should be able to answer the following questions: What is the cost terminology that relates to the budgeting process? Why are budgets useful, and how does management philosophy influence the budget process? How are alternative budget time frames used? . | 2008 The McGraw Hill Companies Inc. All Rights Reserved. McGraw Hill Irwin Copyright 2014 by The McGraw Hill Companies Inc. All rights reserved. Chapter 14 Cost Planning PowerPoint Authors Susan Coomer Galbreath . CPA Charles W. Caldwell . CMA Jon A. Booker . CPA CIA Cynthia J. Rooney . CPA McGraw Hill Irwin Copyright 2014 by The McGraw Hill Companies Inc. All rights reserved. 1-3 LO 1 Budgeting A A budget budget isis aa comprehensive comprehensive financial financial plan plan for for achieving achieving thethe financial financial and and operational operational goals goals of of an an organization. organization. Planning Control Developing Steps taken by objectives for management to acquisition ensure that and use of objectives are resources. attained. McGraw Hill Irwin 14 3 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-4 LO 2 Budgeting Enhanced managerial responsibility Coordination Performance of activities Benefits evaluation Assignment of decision making responsibilities McGraw Hill Irwin 14 4 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-5 LO 2 Participative Budgeting Flow of Budget Data Top M anagem ent M id d le M id d le M anagem ent M anagem ent S u p e r v is o r S u p e r v is o r S u p e r v is o r S u p e r v is o r Time Time consuming consuming but but enhances enhances employee employee motivation motivation and and acceptance acceptance of of goals. goals. 14 5 McGraw Hill Irwin 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-6 LO 4 The Budgeting Process Sales Budget Purchases Production Budget Budget Merchandiser Manufacturer Direct Direct Manufacturing Materials Labor Overhead Budget Budget Budget Cost of Goods Operating Expense Sold Budget Budget Budgeted Income Statement Budgeted Statement of Cash Flows McGraw Hill Irwin Budgeted Balance Sheet 14 6 2008 The McGraw Hill Companies Inc. All Rights Reserved. 1-7 LO 4 Sales Budget Sales Budget Estimated Estimated Unit Sales Unit Price Analysis
