PROFIT PLANNING-BUDGETING

Read pg 376 Organize your business Determine when you need cash Baseline to judge how you are doing RoseBowl article

Everyone needs to be involved. Should be created from the bottom up

not from the top down Handout about fraud

10 Budgets – page 375 Exhibit 9-2 First – Sales – everything based on

these # Last – Balance Sheet

1)Sales and 2)Cash Receipts 3)Production Cost of a product: 4)DM ,5)Cash Disb,

6)DL, 7)OH 8)Cost of Goods Manufactured: Unit

Product Cost -Book has Ending Finishing Goods Inventory –

9)Selling and Administrative 10)Cash 11)Income Statement 12)Balance Sheet

*Sales in Units – determine by quarter *x Sales Price = Total Sales

Information that will cause the change in the entire budget

* information you must enter Other numbers are calculated

1st qtr 2nd qtr 3rd qtr 4th qtr TOTAL Sales

1st qtr Sales 70% 30%

2nd qtr Sales 70% 30%

3rd qtr Sales 70% 30%

4th qtr Sales 70%

TOTAl CASH Rec

Sales in Units +*Ending Inventory-FG (% of next

quarter) Total Needs - Less Beginning FG – last months

ending Required production

Production in Units *x Raw materials per unit = Production Needs * +Production for E.I. --% of next quarter Total Needs -Less Beginning Raw Materials – from last

quarter * X cost per pound Cost of Raw Materials to be purchased

1st qtr 2nd qtr 3rd qtr 4th qtr TOTAL purch

1st qtr Pur 50% 50%

2nd qtr Pur 50% 50%

3rd qtr Pur 50% 50%

4th qtr Pur 50%

TOTAl CASH Dis

Production in Units X hours per unit = DL Hours required X average rate =DL $

Use these numbers for overhead driver

Variable Costs (per unit)

Fixed Costs ( same amount each month)

Estimated OH cost/estimated driver =Predetermined overhead rate

Selling and G&A same structure

Combines all three product costs Direct Materials Budget +Direct Labor Budget +Overhead Budget =Total Manufacturing Cost + Beginning WIP -Ending WIP =Cost of Goods Mfg

DON’T USE PAGE 383 IN THE TEXTBOOK.

Variable Costs (per unit)

Fixed Costs ( same amount each month)

Beginning Cash +Cash Receipts Budget = Total Cash incoming

Cash Disbursement Budget +Direct Labor Budget +Overhead Budget +S G&A Budget = Total Cash outgoing

Cash incoming – Cash outgoing = Cash excess -Minimum required balance = Cash Available

Sales Budget -COGS

Beginning FG+COGM Budget -Ending FG

Gross Profit - Selling G&A Budget = Net Income

Cash Budget A/R (Leftovers from Cash Receipts) Inventory (ending FG) Net Property,Plant & Equipment (estimate) =Total Assets A/P (leftovers from DM budget) Long Term Liabilities (estimate) =Total Liabilities Common Stock (estimate) Retained Earning (estimated) +Net Income from Income Statement = Stockholder’s Equity =Total Liabilities and Stockholder’s Equity

See Manufacturing project instructions to create your groups fluid spreadsheet.