All businesses must keep an eye on their cash flows. Because of high fixed costs, small changes in revenues or a client that is delinquent in paying bills can have potentially disastrous effects on the firms cash flows. Sometimes at the end of the day, no one ever knows whether enough cash would be available the next day to cover required loan closings. Departments are uncoordinated, and it is not uncommon to find that one department is pursuing a course that conflicts with the course pursued by another department. Employee morale is low, and turnover is high. Employees complain bitterly that when a job is well done, nobody ever knows about it.
- Understand why organizations budget and the processes they use to create budgets.
- Prepare a sales budget, including a schedule of expected cash receipts.
- Prepare a production budget.
- Prepare a direct materials budget, including a schedule of expected cash disbursements for purchases of materials.
- Prepare a direct labor budget.
- Prepare a manufacturing overhead budget.
- Prepare a selling and administrative expense budget.
- Prepare a cash budget.
- Prepare a budgeted income statement.
- Prepare a budgeted balance sheet.
- Budgeting and processes used to create budget
- Sales budget and expected cash receipt
- Production budget
- Materials budget and schedule of expected cash disbursements
- Direct labor budget
- Manufacturing overhead budget
- Selling and administrative expense budget
- Cash budget
- Budgeted income statement
- Budgeted balance sheet
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