Professional Documents
Culture Documents
Short-term objectives
A.
1.
Sales budget
on sales forecast
a.
inv. to sustain sales;
of DM purchased)
b)
FOH applied)
Feeds directly into the proforma INCOME
STATEMENT
5)
2)
B.
CR & disbsmnt)
Cash Available
a)
Cash balance - beginning cash (cash on hand n
compensating bal. agreements
b)
Cash collections
(1)
(2)
% of cr. Sales)
2)
Cash Disbursements - cash outlays associated with purchases
and w/ operating exp.
a)
(2)
(3)
period
b)
operating expenses
(2)
C.
1.
Proforma Income statements - Sales Budget, COSGS, SG & A &
Interest Expense
2.
Proforma Balance Sheet - display the balances of each B/S
account consistent with the
Income statement and cash budget plans - adjusted for cash
collections and
II.
Long-Term Objectives
A.
2.
Pro Forma Income Statement - planned additions of cap. Equip.
are used for budgeted
Depreciation exp., interest expense associated w/ planned
financing
3.
Cash Budget - planned financing expenses and principal
repayments are included in the
Disbursements on the cash budget.
The CASH BUDGET must be prepared before you can complete the
The annual
computations
flexible budget
Authoritative standards -
employee input
Participative standards -
conditions.
Expected value is therefore the most useful of the listed statistics when risk is
being prioritized. Expected value computations that assign probabilities to potential
outcomes quantify both the likelihood (percentage) and outcome (amounts) into a
single value.
Uncontrollable risks are, by definition, not within the ability of the manager
to mitigate. Like sunk costs that will not change regardless of priorities,
uncontrollable risk is not useful when prioritizing risk.
(Standard variable overhead rate Standard direct labor hours allowed) + (Standard
fixed overhead rate Actual Production)
(Standard variable overhead rate Standard direct labor hours allowed) + (Standard
fixed overhead rate Standard Production)
Note that direct labor hours based on standard hours means the direct labor hours allowed for
the actual level of production, not the actual direct labor hours used.
Budgeted variable OH = standard direct labor hours allowed x standard variable overhead rate
Budgeted variable OH = actual direct labor hours x standard variable overhead rate
Kaizen
- is a relatively
recent development in costing methods. This method assumes that the only
truly variable costs are the costs for direct materials, so these are the only
costs assigned to the product. All other costs (including direct labor) are
expensed on the throughput contribution margin statement in the period in which
they occur.
Investment SBUs represent the organizational segment with the highest level of
responsibility. Managers not only consider cost, revenues and their relationship, but also the
relationship between profits generated and assets invested.
Transfer pricing deals with prices charged by one business segment to another within a
company.
Strategic Business Units (SBUs) are classified into different types based on the responsibility
levels assigned to their managers. Each of the following items are reasons for