MGM222H5 Lecture Notes - Lecture 9: Startup Company
MGM222-CHAPTER 10- LEC
10 apital udgets ut Capital Expediture Budget
- Sales budget
- Production budget (buffer or ending inventory-for shortage)
- DM; DL; MOH
- Selling and Admin
- Budgeted income
- Cash budget; budgeted balance sheet
Budget
- A formal written stateet of aageet’s plas for a speified future tie period,
expressed in financial terms
- Management is responsible for it (a part of planning)
- Variance = forecast – actual
◼ Could be favorable or unfavorable
◼ Should be detected as soon as possible
- Length:
◼ One year = common
◼ Or continuous or rolling budgets can be used too
- Factors considered in sales forecasting:
◼ Previous market shares
◼ Price changes
◼ Technological developments
- Bottom-to-top approach: (participative budget)
◼ Better idea of what is happening dailye
◼ Everybody is involved
◆ Takes time
◆ Can be more expensive
Other type of budget:
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