微观经济学Budgeting and responsibility accounting.ppt

1、1,Chapter 23 Budgeting and responsibility accounting,PowerPoint presentation by Dr Anne Abraham University of Western Sydney 2009 John Wiley & Sons Australia, Ltd,BUDGETING BASICS,A budget is formal written statement of managements plans for a specified future time period, expressed in financial ter

2、ms Accounting information provides historical data on revenues, costs, and expenses Accountants use budgets to express managements plans in financial terms. prepare periodic budget reports,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,2,The benefits of budgeting,Requires a

3、ll levels of management plan ahead Provides definite objectives for evaluating performance Creates an early warning system for potential problems Facilitates coordination of activities within the business Promotes management awareness of the entitys overall operations Motivates personnel throughout

4、organisation to meet planned objectives,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,3,LO1,Essentials of effective budgeting,Depends on sound organisational structure Authority and responsibility for all phases of operations must be clearly defined Based on research and a

5、nalysis Realistic goals that will contribute to the growth and profitability of the company Directly related to acceptance by all levels of management,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,4,LO2,Length of the budget period,A budget may be prepared for any length of

6、 time The budget period must be long enough to provide an attainable goal under normal business conditions The most common budget period is one year Many companies supplement this with quarterly or monthly budgets,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,5,The budgeti

7、ng process,Budgeting starts with a sales forecast Sales forecasting depends on General economic conditions Industry trends Market research studies Anticipated advertising and promotion Previous market share Changes in prices Technological developments Many companies coordinate budget preparation by

8、a budget committee,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,6,Budgeting and human behaviour,There will be a strong positive influence on a manager when: Each level of management is invited and encouraged to participate in developing the budget Criticism of a managers

9、performance is tempered with advice and assistance Top management is sensitive to the behavioural implications of its actions,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,7,Budgeting and long-range planning,Long-range planning is a formalised process of Selecting strategi

10、es to achieve long-term goals, and Developing policies and plans to implement the strategies Usually encompasses 3-5 years Long-range budgets Contain less detail than annual budgets Have a strategic emphasis,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,8,The master budget

11、,The master budget is a set of interrelated budgets It consists of 2 types of budgets: Operating budgets (sales and production) which lead to the budgeted income statement Financial budgets (cash budget and budgeted statement of financial performance) that are concerned with cash resources for expec

12、ted operations and capital expenditure,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,9,LO3,The master budget continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,10,PREPARING THE OPERATING BUDGETS,Sales budget Production budget Direct material

13、s budget Direct labour budget Manufacturing overhead budget Selling and administration expense budget Cash budget,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,11,Sales budget,The sales budget is based on the forecast of sales revenue for the budget period It acts a starti

14、ng point for the master budget It shows expected unit sales volume times anticipated unit selling price It sets activity levels for other functions (e.g., production, purchasing),PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,12,Sales budget continued,PowerPoint presentatio

15、n by Dr Anne Abraham, University of Western Sydney,13,Production budget,The production budget shows the units to be produced in order to meet expected sales It involves realistic estimates in order to avoid insufficient or excessive ending inventory,PowerPoint presentation by Dr Anne Abraham, Univer

16、sity of Western Sydney,14,Production budget continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,15,a 20% of next quarters sales b Expected 2012 first-quarter sales, 5000 units x 20% c 20% of estimated first-quarter 2011 sales units,a,b,c,Direct materials budget,The dir

17、ect materials budget estimates quantity and cost of materials to be purchased Budgeted cost of direct materials is calculated by multiplying required units of material times anticipated cost per unit,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,16,Direct materials budget

18、continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,17,Q1 Q2 Q3 Q4 Year Units to be produced 3 100 3 600 4 100 4 600 DM per unit (kg) 2 2 2 2 Total kg needed for prodn 6 200 7 200 8 200 9 200 Add: Desired end DM (kg) 720 820 920 1 020 Total materials required 6 900 8 0

19、20 9 120 10 220 Less: Beg DM (kg) 620 720 820 920 DM purchased 6 300 7 300 8 300 9 300 . Cost per kg $4 $4 $4 $4 Total cost of DMpurchases $25 200 $29 200 $33 200 $37 200 $124 800,HAYES PTY LTD Direct Materials Budget for the year ending 31 December 2011,a 10% of next quarters production b Estimated

20、 2012 first-quarter kg needed for production, 10 200 x 10% c 10% of estimated first-quarter kg needed for production,a,b,c,Direct labour budget,The direct labour budget estimates quantity (hours) and cost of labour needed for production requirements The budget is calculated by multiplying required l

21、abour hours (from production budget) times anticipated hourly wage rate It involves realistic estimates of labour force required for anticipated level of production activity,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,18,Direct labour budget continued,PowerPoint presenta

22、tion by Dr Anne Abraham, University of Western Sydney,19,Manufacturing overhead budget,The manufacturing overhead budget distinguishes between variable and fixed overhead costs Variable overhead costs fluctuate with changes to production volume Total fixed overhead costs are estimated, then divided

23、by cost driver to establish per-unit rate to be applied to production,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,20,Manufacturing overhead budget continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,21,Selling and administrative expense bud

24、get,The selling and administrative expense budget distinguishes between variable and fixed expenses Variable expenses are based on budgeted unit sales Fixed expenses are based on assumed costs for the period,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,22,Selling and admi

25、nistrative expense budget continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,23,Budgeted income statement,The budgeted income statement is the end product of the operating budgets It shows expected profitability for budget period It combines individual operating budge

26、ts plus additional expenses (e.g., interest, taxes) It forms a basis for performance evaluation,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,24,LO4,Budgeted income statement continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,25,PREPARING TH

27、E FINANCIAL BUDGETS,The financial budgets consist of The capital expenditure budget The cash budget The budgeted statement of financial position,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,26,Cash budget,The cash budget shows anticipated cash flows It combines ending cas

28、h balance from previous period plus details from other budgets The annual cash budget is often detailed on monthly basis to reflect anticipated levels of activities It helps plan for cash excesses and shortfalls,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,27,LO5,Cash bud

29、get continued,The cash budget has three sections: Cash receipts: expected cash inflows from customers, interest, dividends, planned sales of assets and shares Cash disbursements: expected cash outflows for direct materials and labour, overheads, selling and administration costs, taxes, dividends, as

30、sets Financing: expected cash borrowings and repayments of borrowings,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,28,Cash budget continued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,29,Budgeted statement of financial position,The budgeted st

31、atement of financial position is a projection of the financial position at end of budget period It combines the previous periods budgeted statement of financial position and budgets for current period (sales, direct materials, direct labour, overheads, selling and administration budgets) The format

32、is similar to that prepared for external users,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,30,BUDGETING IN NON-MANUFACTURING ENTITIES,Budgeting is not limited to manufacturing entities Budgets may also be used in profit planning by a range of other entities: Retailers an

33、d wholesalers Service entities Not-for-profit organisations,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,31,Retailers and wholesalers,Sales budget is the starting point Sales budget drives the master budget Master budget incorporates departmental budgets Inventory purchas

34、es budget used instead of production budget Inventory purchases budget shows estimated cost of goods needed to meet sales,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,32,Retailers and wholesalers continued,Formula for determining budgeted inventory purchases:,PowerPoint p

35、resentation by Dr Anne Abraham, University of Western Sydney,33,Service entities,Expected output drives master budget Levels of staff planned to match anticipated levels of service Profitability affected by: overstaffing (excessive labour costs) and understaffing (client dissatisfaction thus low rev

36、enue) Service revenue determined by billing time and services offered,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,34,Not-for-profit organisations,Budgeting involves planned expenditure to fund activity index usually drives master budget Budget is often prepared on cash b

37、asis, not accrual basis Management task is to find sufficient cash receipts for planned expenditure,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,35,CONCEPT OF BUDGETARY CONTROL,Budgetary control refers to the use of budgets to control operations by comparing actual result

38、s with planned objectives Comparisons occur at regular intervals: daily, weekly or monthly as required Budget reports provided feedback about the progress of planned activities Differences are analysed so plans can be modified if necessary,PowerPoint presentation by Dr Anne Abraham, University of We

39、stern Sydney,36,LO7,CONCEPT OF BUDGETARY CONTROL continued,Budgetary control components:,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,37,STATIC BUDGET REPORTS,Project budget data at one level of activity only Actual results compared with anticipated level of activity Unfa

40、vourable (U) results occur when actual revenue below or actual expenses above targets Favourable (F) results occur when actual revenue above or actual expenses below targets,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,38,STATIC BUDGET REPORTS continued,Management determi

41、nes significance (materiality) of differences This is followed by investigation of reasons for differences Appropriate corrective actions depend on causes for differences,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,39,STATIC BUDGET REPORTS continued,A static budget is ap

42、propriate for evaluating a managers performance if: Actual level of activity closely approximates master budget activity level Behaviour of costs in response to changes in activity is fixed,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,40,STATIC BUDGET REPORTS continued,Ex

43、ample Budget and actual sales data,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,41,Sales 1st Qtr 2nd Qtr Total Budgeted$180 000$210 000$390 000 Actual 179 000 199 500 378 500 Difference$ 1 000$ 10 500$ 11 500,STATIC BUDGET REPORTS continued,Sales budget report: 1st quarte

44、r,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,42,a,a In practice, each product line would be included in the report,STATIC BUDGET REPORTS continued,Sales budget report: 2nd quarter,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,43,FLEXIBLE BUDGE

45、TS,Flexible budgets project budget data for various levels of activity Flexible budgets are static budgets at different activity levels Master budget adapts to changing operating conditions Total fixed costs do not change as activity levels change Total variable costs do change as per unit activitie

46、s change,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,44,LO9,Developing the flexible budget,Identify activity index and relevant range Identify variable costs and budgeted costs per unit Identify fixed costs and establish budgeted amounts Prepare budget for selected level

47、s of activity within relevant range,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,45,Flexible budget a case study,Master budget data Variable costs per direct labour hour,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,46,Variable cost Calculation

48、VC per DL hour Indirect materials$180 000 120 000$1.50 Indirect labour 240 000 120 000 2.00 Utilities 60 000 120 000 0.50 Total$4.00,Variable costsFixed costs Indirect materials$180 000Depreciation $180 000 Indirect labour 240 000Supervision 120 000 Utilities 60 000Factory rent 120 000 Total$480 000

49、 Total $420 000,Flexible budget a case studycontinued,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,47,Flexible budget reports,Two sections for analysing production and cost control: Production data (e.g., direct labour hours) Cost data (for fixed and variable costs) Both

50、actual and budgeted costs are based on same activity level Flexible budgets are widely used in production and service departments,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,48,Flexible budget reportscontinued,PowerPoint presentation by Dr Anne Abraham, University of Wes

51、tern Sydney,49,Management by exception,Budget reports reviewed when actual and budgeted results differ significantly Management focuses on problem areas Two guidelines are generally used to identify level of significance: Materiality: variance from budget by more than a predetermined amount Controll

52、ability: ability of manager to influence item,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,50,THE CONCEPT OF RESPONSIBILITY ACCOUNTING,Involves accumulating and reporting costs and revenues on the basis of the managers with authority to make decisions concerning the items

53、 Personalises management accounting systems Performance reports relate only to controllable items Effectiveness can be measured and reported at all management levels,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,51,THE CONCEPT OF RESPONSIBILITY ACCOUNTING continued,Respons

54、ibility accounting is especially valuable in a decentralised entity Decentralisation means that control has been delegated to many individual managers throughout the organisation A segment is an area of responsibility within decentralised organisation Each manager prepares regular reports for an ind

55、ividual area of responsibility,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,52,THE CONCEPT OF RESPONSIBILITY ACCOUNTING continued,Gives managers responsibility for controllable costs at individual levels,PowerPoint presentation by Dr Anne Abraham, University of Western Sy

56、dney,53,Controllable versus non-controllable income and costs,All cost or income items are controllable at some level of responsibility All costs are controllable at the top Costs are less controllable as one moves down through levels of management Direct costs are generally controllable in areas wh

57、ere incurred Indirect costs are generally allocated and are therefore uncontrollable,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,54,Responsibility reporting system,A responsibility reporting system involves the preparation of reports for each area of responsibility start

58、ing at the lowest level of responsibility They are collated and summarised as one progresses upwards through levels of responsibility Costs and revenues are identified as controllable at appropriate levels Management by exception is possible at each level,PowerPoint presentation by Dr Anne Abraham,

59、University of Western Sydney,55,TYPES OF RESPONSIBILITY CENTRES,There are 3 basic types of responsibility centres Cost centres: incur costs but do not directly generate revenue Profit centres: incur costs and also generate revenue Investment centres: incur costs, generate income and has control over the investment funds available for its use,PowerPoint presentation by Dr Anne Abraham, University of Western Sydney,56,Responsibility accounting for cost centres,Performance of a cost centre manager is evaluated by comparing actua