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This budget details how the business expects to go from the beginning cash balance to the desired ending cash balances.
What is the cash budget?
This budget includes the Sales Budget, Inventory Purchases Budget, and Selling and Administrative Expense Budget
What is the Master Budget?
This is a financial plan that managers use to coordinate a business’s activities.
What is a Budget?
If beginning inventory for April is $800, than ending inventory for March is this.
What is $800?
The company plans to purchase 10,500 pounds of material at $4 per pound. This is the total cost of materials purchases.
What is $42,000?
This is a short-term financial plan used to coordinate the activities needed to achieve the short-term goals of the company.
What is an operational budget?
This budget determines the quantity and cost of inventory that must be purchased.
What is the Inventory Purchases Budget?
This is a long-term financial plan used to coordinate the activities needed to achieve the long-term goals of the company.
What is a strategic budget?
This presents a company’s plan for purchasing long-term assets.
What is a capital expenditures budget?
Budgeted sales are 8,000 units at $25 each.
This is total budgeted sales revenue.
What is $200,000?
This is a type of operational budget that involves continuously adding one additional month as each month goes by.
What is a continuous budget?
Under this approach the previous year’s actual results are ignored and all revenues and expenses must be justified for each new period.
What is a zero-based budget?
This occurs when managers intentionally understate expected revenues or overstate expected expenses.
What is Budgetary Slack?
This includes the cash budget and the budgeted financial statements.
What is a financial budget?
A company expects to sell 5,000 units in March. Desired ending inventory is 800 units. Beginning inventory is 600 units. This is the number of units that must be produced in March.
What is 5,200 units?
This formula is used in the production budget: Budgeted Sales + Desired Ending Inventory − this item.
What is beginning inventory?
This is a budgeting process where those individuals who are directly impacted by a budget are involved in the development of the budget.
What is a Participative Budget?
This is the practice of comparing a company with its prior performance or with best practices from other companies.
What is Benchmarking?
This is a set of budgets that projects sales revenue, cost of goods sold, and selling and administrative expenses, all of which feed into the cash budget and then the budgeted financial statements.
What is an operating budget?
This is the number of pounds to be purchased when Production requires 10,000 pounds of material, Desired ending materials inventory is 2,000 pounds, and Beginning materials inventory is 1,500 pounds.
What is 10,500 pounds?
This is the last step before creating a budgeted balance sheet.
What is a budgeted income statement?
This is the first step in creating a master budget
What is the sales budget?
Managers use budgets to do these 4 things.
• Develop strategies
• Plan and budget for specific actions to achieve goals
• Implement plans
• Take corrective action
This is the operating income if Sales revenue is $200,000, Cost of goods sold is $140,000, and Selling & administrative expenses are $30,000.
What is $30,000?
This is the amount a company must borrow if it requires a minimum cash balance of $10,000 and ending cash before financing is negative $5,000.
What is $15,000?