MALİYET VE YÖNETİM MUHASEBESİ

Budget is a quantitative expression of the managements’ plans for a specific period of time, either in physical or financial terms or both.

Capital budgeting is the process of evaluating the feasibility of a project, using some indicators such as rate of return, the time needed to pay back, etc.

A master budget is the combination of operational and financial budgets covering all aspects of company’s operations for a period of time

Managers prepare budgets with the objectives of;

Benefits of budgeting can be explained as follows:

Short-term budgets determine the goals to reach in the short-term period, which is usually a 12 months period

Master budget; is the comprehensive set of schedules and budgets that covers all phases of the company’s operations and describes the company’s overall financial plans for the following period.

Static (Fixed) budgets; are the budgets, in which the predetermined sales levels are used in preparing the budgets. In other words, the static budget remains unchanged irrespective of the actual level of activity. This kind of budget does not consider a possible difference between the actual and budgeted production volumes. Therefore, any deviation from the budget may result because of the difference between either the actual and budgeted volume or different-than-standard unit costs/prices. It mainly aims to coordinate sectional activities to attain company objectives.

Flexible budgets; are prepared to prevent the unexpected effects of uncertainties in activity volumes, as opposed to static budgets. The flexible budgets are prepared for a specific interval, rather than a specific activity level, by considering the cost behavior pattern. These budgets help management with the variance analysis and make it easier to match the variances with the corresponding responsibility centers. For example, if the actual income differs from the budgeted income, which portion of the deviation results from the deviation in sales volume and which portion results from the difference between standard and actual unit costs (and/or sales prices) can be revealed with the help of flexible budgets.

Over the years, budgeting techniques have taken different forms in order to improve the efficiency of planning and executing the operations. Different approaches are developed for different companies, depending on the nature and variety of their operations. If the operations are suggested to incur cumulatively over the years, “incremental budgeting” is preferable; whereas “zero-based budgets” may be better for planning each year separate than the preceding one. On the other hand, companies with a high variety of activities may plan for and assess the performance of their operations by using the “Activity-Based Budgeting (ABB)” technique. As a philosophy of continuous improvement, it may be the best choice to apply kaizen budgeting instead of the other techniques.

Operating budgets reflect the company’s short-term plans related to the implementation of strategic projects, and result in the preparation of budgeted income statement.

A master budget is the combination of operational and financial budgets covering all aspects of company’s operations for a period of time

Benefits of budgeting can be explained as follows: Efficient Resource Allocation, Communication, Coordination, Performance Evaluation, Time Management, Motivation

Long-term budgets, on the other hand, are prepared considering the strategic goals and the mission of the company

Master budget; is the comprehensive set of schedules and budgets that covers all phases of the company’s operations and describes the company’s overall financial plans for the following period.

The first budget to prepare in the budgeting process is the sales budget.

Ending inventories budget provides an important input for the preparation of both pro forma balance sheet and cost of goods sold budget.

Financial leverage, is the use of debt in financing the acquisition of new assets.

In this easy-to-implement technique, what managers need to do is just adjusting the current year’s budget for small changes.

Goal congruence; is a term that states the consistency between the objectives of the organization and its subordinates is important to achieve the desired results.