CHAPTER 9. The Budget Preparation. In this chapter, we will discuss:. The basics of budgeting Why budgets are important for control purposes Various types of budgets When each type of budget is used How to prepare some of the important budgets What are their limitations
The Budget Preparation
Note: Initial flow of budget data in a participatory system is from lower levels of responsibility to higher levels of responsibility. Each responsibility center manager prepares his/her budget estimates and submits to the next higher level of management. These estimates are reviewed and consolidated as they move upward in the organization.
Let us now prepare one or two small budgets – use the description and the numbers given in the next set of slides.
The exercises would give you a basic idea of the budgeting process (although not the human interactions involved during such a process)
The company’s single product sells for $8 per unit. Budgeted sales in units for the next six quarters are as follows:
Based on these numbers, we will prepare a schedule of cash collections
Based on Sales Budget, The Production Budget for Mylar description and the numbers given in the next set of slides.
Mylar – Production Budget – Raw Material Requirement description and the numbers given in the next set of slides.