Master Budget

Budget - quantitatve expression of a proposed plan of action by management for a specified period

Financial Budget - quantifies managers expectation regarding a company’s income, cash flows, and financial position.

Strategy - specifies how an organization matches its capabilities with the opportunities in the  marketplace to accomplish objectives.

Master Budget - expresses management’s operating and financial plans for a specified period, usually a fiscal year.

Master Budget - is the initial plan of what a company intends to accomplish in the period and evolves from both operating and financing decisions managers make as they prepare the budget.

Operating Decision - deals with how to best use the limited resources of an organization.

Financing Decision - deals with how to obtain funds to acquire those resources.

Coordination - meshing and balancing all aspects of production or service and all departments in a company in the best way for the company to meet its goals.

Communication - a way that making sure all the employees understand those goals.

Rolling Budget - is a budget that is always available for a specified future period.

Revenue Budget - starting point of the operating budget.

High Inventory Levels - increases the cost of carrying inventory, the cost of quality, an shrinkage cost

Low inventory Levels - increases set up cost and results in lost sales because of product unavailability

Production Budget - determines budgeted production cost (dm, dl, moh).

Activity Based Budgeting - a budgeting method that focuses on the budgeted cost of the activities necessary to produce and sell products or services.

Budgeting - cross functional activity

Financial Planning Models - are mathematical representations of the relationship among operating activities, financing activities, and other factors that affect the master budget.

Sensitivity Analysis - is a “what if “ tehcniqie that examines how a result will change if the original predicted data are not achieved or if an underlying assumption changes.

Organization Structure - is an arrangement of lines of responsibility within an organization.

Responsibility Center- is a part segment or subunit of an organization whose manager is accountable for specified activities

Responsibility Accounting - is a system measures the plans, budgets, actions, and actual result of each responsibility center.

Cost Center - the manager is accountable for cost only

Revenue Center - manager is accountable for revenue only

Profit Center - The manager is accountable for revenues and cost

Investment Center - the manager is accountable for investments, revenues, and cost.

Budget Variances - differences between actual results and budgeted amounts.

Controllability - is a degree of influence a specific manager has ove cost, revenues, or related items for which he or she is responsible.

Controllable Cost - is any cost subject to influence pf a given responsibility center manager for a given period.

Budgetary Slack - is the practice of underestimating budgeted revenues or overestimating budgeted cost to make the budgeted targets easier to achieve.

Kaizen Budgeting - explicitly incorporates continuous improvement anticipated during the budget period into the budget number