ACCT 2550 Chapter 7: Chapter 7
20 Nov 2016
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Document Summary
The process used by businesses to describe how they intend to achieve their desired financial and nonfinancial objectives. Advantages of budgeting: think about and plan for the future, uncover potential bottlenecks, communicating plans, define goal and objectives, means of allocating resources, coordinate activities. Overview of the master budget: sales budget - a detailed schedule showing the expected sales for the. The production budget: lists the number of units that must be produced during each budget period to meet sales needs and to provide for the desired ending inventory. Inventory purchases merchandising firm: a merchandise purchases budget shows the amount of goods to be purchased from suppliers during the period. Direct materials budget: details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories. Direct labour budget: direct labour requirements must be computed so that the company will know whether sufficient labour time is available to meet production needs and plan accordingly.
