2. Matakuliah : COST ACCOUNTING
Tahun : 2009
Chapter 15, 16 BUDGETING: PROFITS, SALES, COSTS, & EXPENSES, AND CASH BUDGET Learning 25, 26

3. Profit Planning (Budgeting)
Profit planning is the development of an operational plan to achieve a company’s goals and objectives.
A budget is simply a plan expressed in financial and other quantitative terms.
A company’s profit plan consists of a detailed operating budget and budgeted financial statements.
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4. Profit Planning Budgets are distinct from forecasts.
A budget represents the expected profit level of target that management strives to achieve.
A forecast is what the organization predicts will occur.
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5. Long-Range Profit Planning
As the continuous process of making present decisions systematically and, with the best possible knowledge of their futurity, organizing systematically the efforts needed to carry out these decisions, and measuring the results of these decisions against expectations through organized, systematic feedback.
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6. Short-Range Budgets
Long range plans must be incorporated into a shorter range budget for planning and controlling the contemplated course of action. Short range budgets can cover periods of 3, 6, or 12 months, depending on the nature of the business.
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7. Advantages of Profit Planning
Profit planning provides a disciplined approach to problem identification and problem solving.
Profit planning provides direction to all levels of management.
Profit planning enhances coordination.
Profit planning provides a way to enlist ideas and cooperation of all levels of management.
The budget provides a yardstick for evaluating actual performance and gauging.
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8. Limitations of Profit Planning
Forecasting is not an exact science; a certain amount of judgment is present in any estimate. Because a budget must be based on forecasts of future events, a revision or modification of the budget should be made when variations from estimates warrant a change of plans.
The budget can focus a manager’s attention on goals that are not necessarily in harmony with the organization’s overall objectives.
Profit planning must be the commitment of top management and the cooperation of all members of management.
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9. Limitations of Profit Planning
Excessive use of the budget as an evaluation tool can result in dysfunctional behavior.
Profit planning does not eliminate or replace the role administration.
Installation takes time.
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10. Principles of Budgeting
The budgeting process usually is directed by a budget committee composed of the sales manager, the production manager, the chief engineer, the treasures and the controller.
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11. Principles of Budgeting
The principal function of the budget committee are to:
Decide on general policies.
Request and review individual budget estimates.
Suggest revisions in individual budget estimates.
Aprrove budgets and later revisions.
Analyze budgets reports.
Recommend actions to improve efficiency
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12. The Complete Periodic Budget
A complete set of budgets generally consits of the following elements:
A sales budget.
Estimates of inventory and production requirements.
Budgets of materials, labor, and factory overhead, combined into a cost of goods manufactured and sold schedule.
Budgets for marketing and administrative expenses
Estimates of other income and expense items and income tax.
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13. A budgeted income statement.
A budget of capital expenditures and or research and development expenditures.
A cash receipts and disbursements budget.
A budgeted balance sheet showing the estimated financial position of the company at the end of the budget period.
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14. Cash Budget
A cash budget involves detailed estimates of anticipated cash receipts and disbursements for the budget period.
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15. Cash Budget A cash budget does the following:
Indicates cash requirements needed for current operating activities.
Aids in focusing on cash usage priorities that are currently required and unavoidable versus those that are postponable or permanently avoidable.
Indicates the cash effects of seasonal requirements, large inventories, unusual receipts, and showness in collecting receivables.
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16. Indicates the availability of cash for taking advantage of discounts.
Indicates the cash requirements for a plant or equipment expansion program.
Assists in planning for bond retirements, income tax payments, and contributions to pension plan.
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17. Shows the need for borrowings or sales of securities.
Shows availability of excess funds for short term or long term investments.
Shows the need for borrowings or sales of securities.
Serves as a basis for evaluating actual cash management.
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