3. Activity-Based Costing versus Activity-Based Budgeting Resources Cost objects: products and services produced, and customers served. Activities Resources Forecast of products and services to be produced and customers served. Activities Activity-Based Costing (ABC) Activity-Based Budgeting (ABB)
4. Types of Budgets Detail Budget Detail Budget Detail Budget Master Budget Covering all phases of a company’s operations. Sales Production Materials
5. Types of Budgets 1999 2000 2001 2002 Continuous or Rolling Budget This budget is usually a twelve-month budget that rolls forward one month as the current month is completed. L o n g R a n g e B u d g e t s Capital budgets with acquisitions that normally cover several years.
6. Direct Materials Budget Sales of Services or Goods Ending Inventory Budget Work in Process and Finished Goods Production Budget Selling and Administrative Budget Direct Labor Budget Overhead Budget Ending Inventory Budget Direct Materials
7. Budgeted Financial Statements Direct Materials Budget Cash Budget Sales of Services or Goods Ending Inventory Budget Work in Process and Finished Goods Production Budget Selling and Administrative Budget Direct Labor Budget Overhead Budget Ending Inventory Budget Direct Materials Exh. 9-1
10. Production Budget Completed Production must be adequate to meet budgeted sales and provide for sufficient ending inventory. Sales Budget Production Budget
53. Budgeted Income Statement Completed After we complete the cash budget, we can prepare the budgeted income statement for Breakers. Cash Budget Budgeted Income Statement
54. Budgeted Ending Inventory * rounded Manufacturing overhead is applied on the basis of direct labor hours. Total overhead $191,000 Total labor hours 10,600 hrs. = $18.02 per hr. *