MGMT 1B Lecture Notes - Lecture 9: Cost Driver, Cash Flow
Document Summary
Prepare budgeted p & l (profit and loss), balance sheet, cash budget (like cash flow) Sales/ revenues budget: estimated # units x estimated price/ unit= budgeted sales. Production budget: budgeted units to be sold + desired finished goods inventory- beginning finished goods inventory= units needed to be produced. Then if know units to be produced , determine: the raw materials budget and direct labor. Direct labor budget: units to be produced x # dl hrs/ unit= dl hours required x dl rate (cost/ hr)= dl budget. Factory overhead: units to be produced x # dl hrs/ unit (cost driver= dl hrs required x predetermined variable overhead rate= estimated variable overhead + budgeted fixed overhead= total overhead. Standard: based on what we expect to produce. There are three approaches to tracking costs. Actual cost system: actual dm, dl, and foh. Normal cost system: actual dm and dl; applied foh (based on overhead.
