AC 212 Lecture Notes - Lecture 9: Strategic Planning, Earnings Before Interest And Taxes, Income Statement
4 Jan 2018
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Lo 1 describe how and why mangers use budgets. Lo 1 describe how and why managers use budgets. Budget: a plan that covers a specific period of time, helps management determine how to use resources, used to estimate future costs and revenues. Budget development: begins with company"s mission or purpose statement, develop long-term strategic goals, strategic planning: setting long-term goals that extend 5 to 19 years into the future, design plan to attain goals, shorter-term budget. Rolling budget: a budget that is continuously updated so that the next 12 months of operations are always budgeted. Participative budgeting: improves participation of many levels of management. Advantages: lower-level managers closer to action, more likely to be motivated by a budget they helped created. Disadvantages: more complex and time consuming, may intentionally build in slack. Zero-based budgeting: managers begin with a zero budget and must justify each dollar. Budgeting committee: also involved in budgeting process.
