Microsoft PowerPoint - Chapter 9.pdfVIP

2011-12-6 1 1 Chapter 9 The Operating Budget 2 Learning Objectives 1. Describe some of the benefits of the operating budget. 2. Describe the three budgeted financial statements contained in the operating budget and the other budgets that support the budgeted financial statements. 3. Compare and contrast various approaches to preparing and using the operating budget. 4. Describe the role of the sales forecast in the budgeting process. 5. Prepare various budgets included in the operating budget. 6. Describe the flexible budget and the flexible budget performance report. 7. Describe the appropriate use of the operating budget in the overall management process. 3 Benefits of Budgeting LO1 Describe some of the benefits of the operating budget. ? Budgeting serves as a guide. ? Budgeting sets performance standards or benchmarks. ? Helps organizations allocate resources. ? It encourages communication and coordination. 4 Operating Budget LO2 Describe the three budgeted financial statements contained in the operating budget and the other budgets that support the budgeted financial statements. ? The operating budget is a set of estimated financial statements. ? It includes several detailed schedules that provide the backup documentation for the financial statements. 5 Contents of Operating Budget LO2 Budgeted Balance Sheet Budgeted Income Statement Budgeted Statement of Cash Flows 6 Supporting Schedules Sales Budget Production or Purchases Budget Cost of Goods Sold or Cost of Services Budget LO2 2011-12-6 2 7 Supporting Schedules Cash Budget Budgeted Statement of Cash Flows Selling and Administrative Expense Budget 1 LO2 8 Interrelationship Among the Budgets Sales Forecast Sales Budget Production Budget Cost of Goods Sold Budget Selling and Admin. Expense Budget Cash Budget Budgeted Income Statement Budgeted Balance Sheet Budgeted Statement of Cash Flows LO2 9 Different Approaches to Budgeting LO3 Explain the differences between product cost for a merchandiser and for a manuf