Managerial Accounting Part - Budgeting and financial planning

Question

The master budget is part of an overall organizational plan made up of three components. Name them.

Answer 1

Organizational goals --> management's broad objectives that employees work to achieve
The strategic long-range profit plan --> steps to be taken to achieve organizational goals
The master budget --> tactical short-range profit plan

Master budget can be classified into operational budget (including sales-, production-, cost of goods manufactured-etc budget) and financial budget (cash budget, budgeted income statement, budgeted balance sheet).

Answer 2

Planning
Faciliating communication and coordination
Allocating resources
Managing financial and operational performance
Evaluating performance and providing incentives

A budget system consists of the elements that show how money is spent within a company for the short and long terms. Companies use budget systems to accomplish goals for growth and sustainability with the finances at hand. The major objectives of a budget system include coordination, allocation of resources and general planning of operations.

Answer 3

Sales staff- being close to customer needs
Market research- can predict long-term trends in attitudes and the effects of social and economic changes on the company's sales, potential markets and products
Sales forecasting- the process of predicting sales of services or goods

Answer 4

Manufacturing firms:

A production budget is developed from budgets for direct materials, direct labor and overhead. A budget for selling, general and administrative (SG&A) expenses is also prepared.

Merchandising firms: