About the Download

Clevetta, what is the difference between forecasting and budgeting?
Managers are always looking for ways to predict sales, expenses and to be prepared for anything that can affect operations. There are different techniques that can help with this.
Financial planning models are mathematical models of the master budget that can react to any set of assumptions about sales, costs, and product mix.
Budgetary analysis is more useful for analyzing the variances between expected and actual results. Futuring is a technique used to examine historical events and to project future events.
An important factor considered by sales forecasters is competitors activities.
All, what else would sales forecasters be interested in?
Daniel, exactly right! Mostly we use examples from manufacturing, but all industries use budgets. Some examples include retailers, service industries and non-profits.Β  Non profits and some governmental entities use cash flows rather than revenues and expenses since they generally operate from funds.Β  In these types of operations, managers have to use budgets as overspending can be illegal!
Budgeted service department cost rates protect the user departments from price fluctuations. Service department efficiencies, service outages, and employee control do not affect cost rates.
All, what information should be considered for a service budget? What are some examples of service departments and what costs might they budget for?
When there is a materials price variance, Β factors that affect the price paid for raw materials include the availability of quantity and cash discounts, the quality of the materials requested, and the delivery method used. To the extent that these factors are considered in setting the price standard, the purchasing department is responsible.Β  For a materials quantity variance- if the variance is due to inexperienced workers, faulty machinery, or carelessness, the production department is responsible.
All, when there are labor price variances and labor quantity variances, what are some factors that cause them? What department is responsible?

Save For Later

has been added to your cart!

have been added to your cart!

You must log in and be a buyer of this download to submit a review.