c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Student Version o Repetition is an important component, a key part of learning. In memory, the more times patterns of thought are repeated, the more likely you will be able to recall information. o These PowerPoint slides have been modified from the lecture decks by making them fill-in-the-blank. Why? So that you get an opportunity to repeat a visual cue (from the lecture or the book) via completing text here. o In addition, most text book exhibits have been removed as they are available in your text directly.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeting Chapter 21

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective Describe budgeting, its objectives, and its impact on human behavior. 1

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Nature and Objectives of Budgeting o _________ play an important role for organizations of all sizes and forms. For example, _________ are used in _________ the operations of _________ agencies, _________, _________, small _________, and _________ companies.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives of Budgeting o Budgeting involves:  __________________________________________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives of Budgeting o Budgeting affects the following managerial functions:  __________________________________________ __________________________________________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives of Budgeting o A budgetary unit of a company is called a _________ _________. o Each _________ _________ is led by a manager who has the _________ and _________ for achieving the center’s _________ goals.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives of Budgeting o As time passes, the _________ performance of a responsibility center can be _________ against the _________ goals. This provides prompt _________ to managers and employees about their performance. o If necessary, responsibility centers can use such _________ to adjust their activities in the future.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Human Behavior and Budgeting o _________ _________ problems can arise in the budgeting process in the following situations:  __________________________________________ __________________________________________.  _____________________________ _____________________________ _____________________________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Human Behavior and Budgeting o Human behavior problems can arise in the budgeting process in the following situations:  __________________________________________ __________________________________________.  _____________________________ _____________________________ _____________________________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Human Behavior and Budgeting o Human behavior problems can arise in the budgeting process in the following situations:  __________________________________________ __________________________________________.  _____________________________ _____________________________ _____________________________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective Describe the basic elements of the budget process, the two major types of budgeting, and the use of computers in budgeting. 2

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeting Systems o The budgetary period for operating activities normally includes the ________ ________ of a company. o A variation of fiscal-year budgeting, called ________ ________, maintains a 12-month projection into the future.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeting Systems o Zero-based ________ requires managers to ________ sales, production, and other operating data as though operations are being started for the ________ ________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Static Budget o A ________ budget shows the expected results of a responsibility center for only ________ ________ ________. The budget ________ change even if the activity changes. o A ________ budget is used by many service companies and for some ________ functions of ________ companies.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Static Budget o The disadvantages of ________ budgets is that they do not adjust for changes in ________ and ________ that occur as ________ change.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Flexible Budget o ________ budgets show the expected results of a responsibility center for several ________ ________. o A ________ budget is, in effect, a ________ of static budgets for ________ levels of ________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective Describe the master budget for a manufacturing company. 3

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Master Budget o The ________ budget is an ________ set of ________, ________, and ________ budgets for a period of time.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Master Budget o For a manufacturing company, the master budget consists of the following integrated budgets:

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective Prepare the basic income statement budgets for a manufacturing company. 4

I NCOME S TATEMENT B UDGETS

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Sales Budgets o The ________ budget begins by estimating the ________ of ________. Once ________ ________ are estimated, the expected ________ ________ can be determined by multiplying the ________ by the expected unit ________ ________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Sales Budgets o The prior year’s sales quantities are revised for such factors as the following:  ____________________________________________

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Production Budget o The ________ budget estimates the number of ________ to be ________ to meet budgeted ________ and ________ ________ levels.

________ Budget ________ units to be ________ +Desired units in ________ ________ –Estimated units in ________ ________ Total units to be ________ ________ units to be ________ +Desired units in ________ ________ –Estimated units in ________ ________ Total units to be ________ _______ Budget P RODUCTION B UDGET

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Direct Materials Purchases Budget o The ________ ________ ________ budget estimates the ________ of ________ ________ to be purchased to support the ________ ________ and desired ________ ________.

________ Budget ________ Purchases Budget ________ Purchases Budget ________ needed for ________ +Desired ________ materials ________ –Estimated ________ materials ________ ________ ________ to be ________ ________ needed for ________ +Desired ________ materials ________ –Estimated ________ materials ________ ________ ________ to be ________ ________ Budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Direct Labor Cost Budget o The ________ ________ cost budget estimates the ________ ________ ________ and related cost needed to support budgeted production.

Production Budget Direct Materials Purchases Budget Direct Materials Purchases Budget ________ Cost Budget ________ Cost Budget Sales Budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Factory Overhead Cost Budget o The ________ ________ cost budget estimates the ________ for each ________ of ________ ________ needed to support budgeted production.

Production Budget Direct Materials Purchases Budget Direct Materials Purchases Budget Direct Labor Cost Budget Direct Labor Cost Budget ________ Cost Budget ________ Cost Budget Sales Budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Cost of Goods Sold Budget o The ________ of ________ ________ budget is prepared by integrating the following budgets:  ________ ________ ________ budget  ________ ________ cost budget

____ of ____ Sold Budget Production Budget Direct Materials Purchases Budget Direct Materials Purchases Budget Direct Labor Cost Budget Direct Labor Cost Budget Factory Overhead Cost Budget Factory Overhead Cost Budget Sales Budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Selling and Administrative Expenses Budget o The ____ and _________ _________ budget is normally supported by _________ schedules. The _________ budget is often used as the starting point for this budget.

Production Budget Direct Materials Purchases Budget Direct Materials Purchases Budget Direct Labor Cost Budget Direct Labor Cost Budget Factory Overhead Cost Budget Factory Overhead Cost Budget Cost of Goods Sold Budget _________ & _____________ _________ Budget Sales Budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeted Income Statement o The _________ _________ statement is prepared by integrating the following budgets:  _________ budget  _________ __ _________ _________ budget  _________ and _________ _________ budget

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objective Prepare balance sheet budgets for a manufacturing company. 5

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Cash Budget o The _________ budget estimates the expected _________ (inflows) and _________ (outflows) of cash for a _________ of _________.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Estimated Cash Payments o To estimate _________ _________ for manufacturing costs, a schedule of _________ for _________ _________ is prepared.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Capital Expenditures Budget o The _________ _________ budget summarizes plans for acquiring _________ _________. Such expenditures are necessary as _________ and other ________ _________ wear out or become _________. o In addition, purchasing additional _________ _________ may be necessary to meet _________ _________ for the company’s product.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeted Balance Sheet o The _________ _________ sheet is prepared based on the _________, _________, and _________ budgets of the master budget. It is similar to a _________ balance sheet except that _________ amounts are used.

c Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part. Budgeting The End