Ikea Report

In: Business and Management

Submitted By syami
Words 961
Pages 4
Budgeting

Objectives - at the end of this class you should be able to:

Explain how budgeting fits into the overall planning and control framework of a business.

Identify and describe the six different purposes of budgeting.

Identify and describe the various stages of the budget process.

Prepare functional and master budgets.

Describe the differences between incremental and zero–based budgeting.

Reminder

Management Accounting =

“The process of measuring and communicating economic information to permit informed judgements and decisions by users of the information”

American Accounting Association.

The decision making process

1. identify objectives

2. search for alternative courses of action

3. gather data about alternatives

4. select alternative courses of action

5. implement the decisions

6. compare actual and planned outcomes

7. respond to divergences from plan

What does a budget do?

Six main functions of a budget

Planning annual operations

Co-ordinating the work of different parts of the business

Communicating the plans to all relevant managers

Motivating managers to achieve the organisations goals

Controlling activities

Evaluating the performance of managers

What does a budget look like?

Annual budgets or rolling budgets.

How do you plan a budget?

1. Determine the limiting factor

(what restricts output?)

2. Prepare the sales budget

3. Prepare the supporting budgets.

Examples of supporting budgets.

Production budget

Direct materials usage Direct materials purchase Direct labour budget Factory Overhead budget Selling &…...

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