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    Reviewer - AC 7

    Uploaded by

    Christine Angeli Arita
    This document provides an overview of strategic cost management and the budgeting process. It discusses that strategic cost management involves developing cost information to facilitate strategic management and competitive positioning. Key aspects of the budgeting process include establishing goals, preparing sales forecasts, estimating costs of goods sold and operating expenses, and projecting income statements, balance sheets, and cash flow statements. The master budget is the comprehensive budget that consolidates the overall financial and operating plan for a specific period and includes operating budgets for sales, production, costs of goods sold, and operating expenses as well as financial budgets for cash flows, balance sheets, and capital expenditures.

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    Reviewer - AC 7

    Uploaded by

    Christine Angeli Arita
    37 views2 pages
    This document provides an overview of strategic cost management and the budgeting process. It discusses that strategic cost management involves developing cost information to facilitate strategic management and competitive positioning. Key aspects of the budgeting process include establishing goals, preparing sales forecasts, estimating costs of goods sold and operating expenses, and projecting income statements, balance sheets, and cash flow statements. The master budget is the comprehensive budget that consolidates the overall financial and operating plan for a specific period and includes operating budgets for sales, production, costs of goods sold, and operating expenses as well as financial budgets for cash flows, balance sheets, and capital expenditures.

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    This document provides an overview of strategic cost management and the budgeting process. It discusses that strategic cost management involves developing cost information to facilitate strategic management and competitive positioning. Key aspects of the budgeting process include establishing goals, preparing sales forecasts, estimating costs of goods sold and operating expenses, and projecting income statements, balance sheets, and cash flow statements. The master budget is the comprehensive budget that consolidates the overall financial and operating plan for a specific period and includes operating budgets for sales, production, costs of goods sold, and operating expenses as well as financial budgets for cash flows, balance sheets, and capital expenditures.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views2 pages

    Reviewer - AC 7

    Uploaded by

    Christine Angeli Arita
    This document provides an overview of strategic cost management and the budgeting process. It discusses that strategic cost management involves developing cost information to facilitate strategic management and competitive positioning. Key aspects of the budgeting process include establishing goals, preparing sales forecasts, estimating costs of goods sold and operating expenses, and projecting income statements, balance sheets, and cash flow statements. The master budget is the comprehensive budget that consolidates the overall financial and operating plan for a specific period and includes operating budgets for sales, production, costs of goods sold, and operating expenses as well as financial budgets for cash flows, balance sheets, and capital expenditures.

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    Reviewer – Strategic Cost Management

    Week 1 Week 3
    Strategic Cost Management – involves the Accounting – recording
    development of cost management,
    Budgeting – basis from historical data
    information to facilitate the principle
    management function which is strategic Capital Budgeting – long range planning
    management.
    Master Budget – short range planning
    Strategic management –
    development of a sustainable competitive Kinds of Budgets:
    position. 1. Master Budget – overall financial
    Users of Cost Management Information: and operating plan for a period
    (quarterly or annual); comprehensive
     Business Firms budget for a specific period
     Governmental Units 2. Capital Budget – long range
     Not-for-Profit Organization budgets for major expenditures or
    addition of new product lines
    Uses of Cost Management Information: 3. Responsibility Budget – segments
    1. Strategic Management of the master budget relating to the
    2. Planning and Decision-making aspect of the business that is the
    3. Management and Operational responsibility of a particular manager
    Control are often prepared monthly
    4. Reportorial and Compliance to Legal 4. Cash Budget – may be prepared on
    Requirements a day-to-day or monthly basis
    5. Continuous Budget – budgets are
    Management Accountants – accounting constantly reviewed and updated
    professionals who develop and analyze cost
    management information and other Steps in Developing a Master Budget
    accounting information. They are concerned 1. Establish goals and long-range plans
    with providing information to the people 2. Prepare a sales forecast
    inside an organization who direct and 3. Estimate the COGS and OE
    control the operations. 4. Determine the effect on A, L, E
    Three important guidelines to help 5. Projected IS, BS, and CFS
    management accountants provide the most Master Budget
    value:
    Budget – detailed plan, expressed in
    1. Employ a cost-benefit approach quantitative terms, about business operations
    2. Recognize behavioral as well as for a specific period.
    technical considerations
    3. Use appropriate cost concepts for Master Budget – can also be called as
    different purpose proforma budget, planning budget, forecast
    budget, master profit plan
    Week 2
    - It is a comprehensive budget that
    Strategic Focus of Cost Management consolidates the overall plan of the
    - A competitive firm incorporates the organization for a specific period.
    emerging and expected change in the Master Budget is mainly composed of:
    contemporary environment of
    business into its business planning 1. Operating Budget:
    and practices. - Sales Budget
    - Guided by strategic or long-term - Production Budget
    thinking  DM budget
    - Should focus not on the  DL budget
    measurement per – but on the  OH budget
    identification of those measures that - Budgeted COGS
    are critical to the firm’s success. - Budgeted OPEX
    - Budgeted NI
    (Dami ng week 2 tinamad na ako)
    - Budgeted IS (Expected beg. FG)
    TOTAL
    2. Financial Budget: Budgeted Materials Purchases
    - Cash budget
    Budgeted prod
    - Budgeted BS
    - Budgeted CFS x qty. of materials req./unit of product
    - Capital Expenditure budget
    - WC Budget Total materials to be used

    Fixed budget – a budget prepared for a one + Desired End. FG


    level of activity within a certain period. (Expected beg. FG)
    Flexible budget – a budget prepared for TOTAL
    different levels of activity within a certain
    period. Cash Budgets

    Continuous budget – a 12-month budget Cash balance, beg.


    that rolls forward one month as the current + Receipts
    moth is completed.
    Total cash available
    Zero-based budgeting – a method of
    budgeting in which managers are required to (Disbursements)
    justify all costs as if the programs involved Excess (deficiency) of cash avail.
    were being proposed for the first time.
    + Financing, (if applicable)
    Imposed budgeting – a process wherein
    budgets are prepared by top management Cash balance, end.
    with little or no inputs from operating
    personnel.
    Participatory budget – a process wherein
    budgets are developed through joint decision
    by top management and operating personnel.
    Budget committee – a group of key
    management person responsible for over-all
    policy matters relating to the budget
    program and for coordinating the budget
    preparation.
    Budget-Manual – this describes how a
    budget is prepared includes a planning
    calendar and distribution instructions for all
    budget schedules.

    Computational Formats
    Budgeted Production
    Budgeted sales
    + Desired end. FG
    (Expected beg. FG)
    TOTAL
    Budgeted Merchandise Purchases
    Budgeted Sales
    + Desired end. FG

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