Please fill in the blanks Budgets?

$$ A $\_\_\_\_\_\_\_\_\_\_\_\_$ is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period.

o A company$$s budget ordinarily covers a $\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ period corresponding to its fiscal year.

o Some companies also use a $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,$ which is a $12-$month budget that continuously rolls forward.

$$ Budgets are used for two distinct purposes:

o $\_\_\_\_\_\_\_\_\_\_\_\_\_$ involves developing objectives and preparing various budgets to achieve those objectives.

o $\_\_\_\_\_\_\_\_\_\_\_\_$ involves the steps taken by management to increase the likelihood that the objectives set down at the planning stage are attained and that all parts of the organization are working together toward that goal.

Why Do Organizations Create Budgets?

$$ Encourage managers to $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ for the future.

$$ Communicate $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ throughout the organization.

$$ Budgets force managers to think about and plan for the future.

$$ Allocate $\_\_\_\_\_\_\_\_\_\_\_\_\_$ within the organization where they can be used most effectively.

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ the plans and activities of departmental managers.

$$ Uncover potential $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ before they occur.

$$ From a control standpoint, organizations compare their budgets to actual results to:

o $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ the efficiency and effectiveness of operations.

o $\_\_\_\_\_\_\_\_\_\_\_\_$ and $\_\_\_\_\_\_\_\_\_\_\_\_\_$ employees

How Do Organizations Create Budgets?

$$ Companies usually create budgets by relying on some combination of $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ budgeting and $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ budgeting.

$$ Top$-$down approach:

o $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ initiate the budgeting process by issuing profit targets.

o Then, lower$-$level managers are directed to prepare budgets that meet those targets.

$$ This approach often $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ lower$-$level managers because it ignores their knowledge and opinions.

$$ Additionally, the targets imposed by top$-$level managers may be $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ or $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

$$ Self$-$imposed approach:

o Also known as $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

o Prepared with the full cooperation and participation of managers at $\_\_\_\_\_\_\_$ levels.

o It is a particularly useful approach if the budget will be used to evaluate managerial performance.

o The advantages of self$-$imposed budgets include:

$$ It shows respect for the opinions of $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

$$ It leverages lower$-$level managers$$ knowledge to provide $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ estimates than those imposed by top$-$level managers who have less intimate knowledge of day$-$to$-$day operations.

$$ It increases lower$-$level managers$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ achieve their own self$-$imposed goals.

$$ It $\_\_\_\_\_\_\_\_\_\_\_\_\_$ lower$-$level managers to take ownership of the budget and be accountable for deviations from it$.$

o Self$-$imposed budgets should be reviewed by higher levels of management. Without such a review, self$-$imposed budgets may have too much $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,$ or may not be aligned with overall strategic objectives.

The Master Budget: An Overview

$$ The master budget consists of a number of separate but $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ budgets.

o The $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ shows the expected sales for the budget period expressed in dollars and units.

$$ It is usually based on a company$$s $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

$$ All other parts of the master budget are dependent on the sales budget.

o The $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ is prepared after the sales budget.

$$ It lists the number of units that must be produced during each budget period to meet sales needs and to provide for the desired ending inventory.

o The production budget in turn directly influences the $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,$ and $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,$ which in turn enable the preparation of the $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

o These budgets are then combined with data from the sales budget and the $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ to determine the cash budget.

o The $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ is a detailed plan showing how cash resources will be acquired and used over a specified time period.

$$ All of the operating budgets have an impact on the cash budget.

o The last step of the process is to prepare a budgeted $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ and a budgeted $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.$

$$ To help you see the $$big picture,$$ keep in mind that the $10$ schedules in a master budget are designed to answer the $10$ questions.