Nature and objectives of budgeting Objectives of budgeting (1) setting goals, (2) executing plans to achieve goals, and (3) periodically comparing actual results with goals. Human behavior and budgeting - setting budget goals to tightly or too loosely and goal conflict Budgeting systems-fiscal-year budgeting and continuous budgeting; zero-based budgeting Static budget - set for one activity level and does not adjust for changes in activity levels Flexible budget - shows expected results for different levels of activity Computerized budgeting systems spreadsheet software (Excel) and integrated budget and planning (B&P) software Master budget - integrated set of operating and financial budgets for a period of time (usually a year) Operating budgets (Exhibit 8, p. 989) Sales budget Production budget Direct materials purchases budget Direct labor cost budget Factory overhead cost budget Cost of goods sold budget Selling and administrative budget Budgeted income statement Financial budgets Cash budget Estimated cash receipts Estimated cash payments Completing the cash budget Capital expenditures budget Budgeted balance sheet