chapter
22
Budgeting
______________________________________________
OPENING COMMENTS
Chapter 22 emphasizes accounting activities that help managers plan, direct, and control the operations of
a business. Budgeting is used to establish business goals in the planning function. Budgets help guide
managers’ operational decisions. Budgets are also used to control operations as actual results are
compared to the budgeted results.
After studying the chapter, your students should be able to:
2. Describe the basic elements of the budget process, the two major types of budgeting, and the use of
computers in budgeting.
4. Prepare the basic operating budgets for a manufacturing company.
5. Prepare financial budgets for a manufacturing company.
KEY TERMS
budget
budgetary slack
capital expenditures budget
cash budget
continuous budgeting
cost of goods sold budget
direct labor cost budget
direct materials purchases budget
factory overhead cost budget
flexible budget
goal conflict
406 Chapter 22 Budgeting
master budget
production budget
responsibility center
sales budget
static budget
zero-based budgeting
STUDENT FAQS
• Since budgets are estimates made before a period begins and may prove wrong, are they worth the
time and effort put into them?
• Why are the cash budget and the capital expenditures budget so important from the balance sheet
budgeting process?
• In a production budget, the volume of production is the first thing to calculate, but deducting the
estimated units in beginning inventory and adding the desired units in ending inventory seems
opposite. Can you explain so I can understand better?
• How do you calculate manufacturing cost?
• The cost of goods sold budget is so long. Why do you expect us to learn to calculate it without the
formula written out?
OBJECTIVE 1
Describe budgeting, its objectives, and its impact on human behavior.
SYNOPSIS
Budgeting plays an important role in aiding managers to plan, direct, and control their business. Planning
involves setting goals, directing helps achieve those goals, and controlling involves comparing the
business’s performance against the budgeted goals that were set. Budgeting can also cause problems in
human behavior. If budgeted goals are set too tightly, and goals are viewed as unachievable, employees
may become discouraged. Reasonable attainable goals motivate employees and managers. Budgeted goals
that are too loose may create inefficiency, by reducing the budgetary incentive to trim spending. Goal
conflict occurs when the employees’ or managers’ self-interest differs from the company’s goals.
Key Terms and Definitions
• Budget – An accounting device used to plan and control resources of operational departments and
divisions.
• Budgetary Slack – Excess resources set within a budget to provide for uncertain events.
• Goal Conflict – A condition that occurs when individual objectives conflict with organizational
objectives.
• Responsibility Center – An organizational unit for which a manager is assigned responsibility
over costs, revenues, or assets.
Chapter 22 Budgeting 407
Relevant Example Exercises and Exhibits
• Exhibit 1 – Planning, Directing, and Controlling
• Exhibit 2 – Human Behavior Problems in Budgeting
SUGGESTED APPROACH
A budget is used to plan and control operational departments and divisions. Review this explanation and
stress the following points:
1. Budgeting begins with planning, which involves setting specific goals for future operations.
2. Directing involves decisions and actions to achieve the budgeted goals.
3. Controlling is periodically comparing actual results to these goals.
4. Budgets are most effective if:
a. Employees help set goals they are expected to achieve.
b. Budgets are realistic, not too strict.
c. Budgets are not “padded” or too loose.
d. Budgets do not encourage employees to act in ways that conflict with business goals.
An example of goal conflict can be taken from the way many instructors assign course grades. There may
be a conflict if the instructor wants students to participate in class discussions, but bases course grades
strictly on exam scores.
CLASS DISCUSSION—Human Behavior and Budgeting
Ask your students to share examples from their own experiences where budgets caused employees to act
in a manner that hurt the performance or profitability of their organization. After accumulating your
students’ ideas, add observations from your own experience. For example, there is usually no incentive
for managers to spend less than their allowed budget, since it will be difficult to negotiate a higher budget
the next year. As a result, managers frequently “spend the budget” as the fiscal year closes.
WRITING EXERCISE—Evaluating Budgeting Procedures
Ask your students to write an answer to the following question (Transparency Master [TM] 22-1).
Pretorious Manufacturing has just hired a new controller, Diana Metcalf. During her first
week on the job, Diana was asked to establish a budget for operating expenses in 2014.
Since Diana was not yet familiar with the operations of Pretorious Manufacturing, she
decided to budget these expenses using the same procedures as the prior controller.
Therefore, in order to establish a budget for operating expenses, Diana started with actual
operating expenses incurred in 2013 and added 4.3 percent. Diana based this percentage
on inflation as measured by the consumer price index.
Comment on the effectiveness of Diana’s budgeting strategy.
408 Chapter 22 Budgeting
Possible response: This method of budgeting would be the least desirable method. Although the
previous year’s budget is a starting point, additional input is required to validate that budget to
determine if changes need to be made. Proper budgeting procedures require the input of various
key management employees in order to accurately predict the company’s needs for the
approaching financial period. This process should be coordinated by a budgeting committee that
gathers information about sales, purchases, capital needs, personnel needs, and various other
operational needs. This input will be used to develop the budget for the impending financial
period.
INTERNET ACTIVITY—Personal Budgeting
To spark interest in the topic of budgeting, ask your students to do a Web search using the word
“Budgeting” as the search criteria. This search should find a variety of Web sites with information on
preparing a personal budget. Ask your students to find a couple of tips on developing a personal budget to
share with the class.
OBJECTIVE 2
Describe the basic elements of the budget process, the two major types of budgeting, and the
use of computers in budgeting.
SYNOPSIS
Budgeting systems are varied and differ between companies; however, most companies budget by the
fiscal year. A variation of this is the continuous budget; it maintains a 12-month projection into the future.
As one month drops off, it is replaced by the same month next year. A common approach to budgeting is
to start with last year’s budget and adjust for any expected changes for the new year. Another approach,
zero-based budgeting, requires that managers estimate sales, production, and other data as if the
operations were starting for the first time. The static budget uses the common approach and shows the
expected results from only one activity level. Once the budget is established, it is not changed even if
sales or production changes. The obvious disadvantage of this method is that it does not account for
changes. Flexible budgets show the expected results for multiple activity levels. Examples of these
budgets are shown in Exhibits 4 and 5. Computers are helpful in developing budgets and linking budget
and planning information across the organization.
Key Terms and Definitions
• Continuous Budgeting – A method of budgeting that provides for maintaining a 12-month
projection into the future.
• Flexible Budget – A budget that adjusts for varying rates of activity.
• Static Budget – A budget that does not adjust to changes in activity levels.
• Zero-Based Budgeting – A concept of budgeting that requires all levels of management to start
from zero and estimate budget data as if there had been no previous activities in their units.
Chapter 22 Budgeting 409
Relevant Example Exercises and Exhibits
• Example Exercise 22-1 Flexible Budgeting
• Exhibit 3 – Continuous Budgeting
• Exhibit 4 – Static Budget
• Exhibit 5 – Flexible Budget
• Exhibit 6 – Static and Flexible Budgets
SUGGESTED APPROACH
TM 22-2 describes the two major types of budgets, the static budget and the flexible budget. When
covering zero-based budgeting, point out that it is rare for an organization to require zero-based budgeting
every year. More typically, zero-based budgeting is used as a tool to take a fresh view of operations each
year. Also point out that the more common approach to budgeting is to start with the prior year’s budget
and revise it to reflect changes that are expected in the coming year. Static budgeting is used mostly for
administrative, selling, and overhead departments. A production department would use flexible
budgeting.
Follow this introduction with additional material to reinforce the concept of a flexible budget. A thorough
understanding of flexible budgeting is essential to material presented in this chapter and Chapter 23,
which addresses standard costing.
WRITING EXERCISE—Flexible Budgets
As an introduction to flexible budgets, ask your students to write a response to the following question
(TM 22-3).
Assume that you manage one store in a chain of sporting goods retailers. Each month,
your store is evaluated by comparing actual operating results to budgeted results.
During December of the current year, your store’s sales were up 25 percent from sales
projected on the budget. As a result of this increase in sales, would you expect any other
items to come in over (or under) their budgeted amounts? If so, list the items and describe
why they would vary from the budget.
Possible response: Items that would be affected by sales higher than budgeted might include cost
of merchandise sold, sales commissions, and other selling expenses. Flexible budgeting at various
sales levels could address this situation.
DEMONSTRATION PROBLEM—Benefits of Flexible Budgeting
As an alternative to the writing exercise above, you may want to capture your students’ attention by
demonstrating the ineffectiveness of a static budget. Relate a static budget to a student’s personal budget.
Assume the student budgets $30 per month for gas. However, during the year, the student gets a job
delivering pizza. As a result, the student spends more than the budget because of increased gas expenses.
Is this really “bad news”? Not if the student’s wages and tips exceed the additional expenses.
TM 22-4 presents information for the Laboratory Services department of Eastgate Hospital. On this TM, a
static budget is compared to actual results. Ask students to comment on how actual results compared to
the hospital’s budget. They will quickly point out that the department was $50,000 over budget. Next, ask
students to evaluate why the variance occurred or to comment on the efficiency of operations. It will be
impossible for them to make any meaningful conclusions from the limited data given.
Next, show TM 22-5, which presents actual results compared against a flexible budget at two activity
levels. Ask students to evaluate the performance of the Laboratory Services department, using this
information. They will be able to see that the department performed quite well, given the increase in
actual test volume. The department actually spent less than what would be expected for performing
14,800 tests. The flexible budget is much more useful than the static budget for planning and control.
LECTURE AID—Preparing a Flexible Budget
By definition, variable costs increase as sales or production increases. Flexible budgets allow a company
to budget for varying levels of sales and production. The following steps are used in preparing a flexible
budget.
1. Identify the relevant activity levels.
2. Identify the fixed and variable cost components of the costs being budgeted.
3. Prepare the budget for each activity level then add the fixed cost for the period.
GROUP LEARNING ACTIVITY—Flexible Budget
TM 22-6 provides information to be used to complete a flexible budget for a manufacturer. Divide your
class into small groups and ask them to prepare the budget for the indicated levels. Recalculating the
budget for three activity levels will emphasize the usefulness of computers in preparing budgets. You may
want to mention that computer software systems such as spreadsheets and integrated budget and planning
programs ease the budget preparation process as well as serve to provide timely results for analysis. The
correct solution is listed on TM 22-7.
OBJECTIVE 3
Describe the master budget for a manufacturing company.
SYNOPSIS
An integrated set of operating and financial budgets for a period of time is called a master budget. Most
are prepared on a yearly basis. Exhibit 7 shows a list of all the individual budgets contained within the
master budget.
Chapter 22 Budgeting 411
Key Terms and Definitions
• Master Budget – The comprehensive budget plan linking all the individual budgets related to
sales, cost of goods sold, operating expenses, projects, capital expenditures, and cash.
Relevant Example Exercises and Exhibits
• Exhibit 7 – Master Budget for a Manufacturing Company
• Exhibit 8 – Operating Budgets
SUGGESTED APPROACH
The master budget is the comprehensive budget plan that includes the many individual budgets used to
estimate income statement and balance sheet items. These budgets are listed in the text under Objective 3.
The actual preparation of the components of the master budget is covered under Objectives 4 and 5.
Refer your students to Exhibit 8 in the text. This exhibit diagrams the relationship between the income
statement budgets within the master budget. Use this illustration to emphasize the importance of properly
organizing the budgeting process. Also stress the dramatic affect budgeting errors can have as they “ripple
down” through the organization.
You may also want to obtain a copy of your college or university budget and distribute it in class as an
example of a master budget. The budgets of most state agencies are public information.
OBJECTIVE 4
Prepare the basic operating budgets for a manufacturing company.
SYNOPSIS
The integrated operating budgets start with preparing a sales budget. The first step in a sales budget is
estimating the quantity of sales for the year. Once sales quantities are estimated, the budgets revenue can
be determined as follows: budgeted revenue = expected sales volume × expected unit sales price. The
production budget should be integrated with the sales budget to ensure that production and sales are kept
in balance throughout the year. The production budget estimates the number of units to be manufactured
to meet budgeted sales and desired inventory levels. Exhibit 10 illustrates the production budget for the
year. After the production budget is complete, the direct materials budget can be completed. The equation
used is: budgeted direct material = budgeted production volume × direct material quantity. The direct
materials purchases budget estimates the quantities of direct materials to be purchased to support
budgeted production and desired inventory levels. Also using information from the production budget is
the direct labor budget. The budgeted direct labor hours required for production is computed as: budgeted
direct labor = budgeted production volume × direct labor hours expected. The factory overhead cost
budget estimates the cost for each item of factory overhead needed to support budgeted production. The
cost of goods sold budget uses information from the direct materials purchase budget, the direct labor cost
budget, and the factory overhead cost budget. The cost of goods sold budget is illustrated in Exhibit 14.
The selling and administrative expenses budget shown in Exhibit 15 also starts with the sales budget. The
412 Chapter 22 Budgeting
budgeted income statement is prepared by integrating the sales budget, the cost of goods sold budget, and
the selling and administrative expenses budget. The budgeted income statement allows management to
assess the effects of estimated sales, costs, and expenses on profits for the upcoming year.
Key Terms and Definitions
• Cost of Goods Sold Budget – A budget of the estimated direct materials, direct labor, and factory
overhead consumed by sold products.
• Direct Labor Cost Budget – Budget that estimates direct labor hours and related costs needed to
support budgeted production.
• Direct Materials Purchases Budget – A budget that uses the production budget as a starting
point to budget materials purchases.
• Factory Overhead Cost Budget – Budget that estimates the cost for each item of factory
overhead needed to support budgeted production.
• Production Budget – A budget of estimated unit production.
• Sales Budget – One of the major elements of the income statement budget that indicates the
quantity of estimated sales and the expected unit selling price.
Relevant Example Exercises and Exhibits
• Example Exercise 22-2 Production Budget
• Example Exercise 22-3 Direct Materials Purchases Budget
• Example Exercise 22-4 Direct Labor Cost Budget
• Example Exercise 22-5 Cost of Goods Sold Budget
• Exhibit 9 – Sales Budget
• Exhibit 10 – Production Budget
• Exhibit 11 – Direct Materials Purchases Budget
• Exhibit 12 – Direct Labor Cost Budget
• Exhibit 13 – Factory Overhead Cost Budget
• Exhibit 14 – Cost of Goods Sold Budget
• Exhibit 15 – Selling and Administrative Expenses Budget
• Exhibit 16 – Budgeted Income Statement
SUGGESTED APPROACH
The budgets prepared by a manufacturer related to income statement items include:
1. Sales budget
2. Production budget
3. Direct materials purchases budget
4. Direct labor cost budget
5. Factory overhead cost budget
6. Cost of goods sold budget
7. Selling and administrative expenses budget
8. Budgeted income statement
Chapter 22 Budgeting 413
It is difficult (if not impossible) to demonstrate all of these budgets in class. Therefore, you may want to
restrict class coverage to the more complicated budgets: production, direct materials purchases, and cost
of goods sold.
Do take the time to emphasize the importance of the sales budget. An accurate sales budget is critical,
since other budgets depend upon the planned level of sales.
DEMONSTRATION PROBLEM—Production Budget
The basic format of a production budget is as follows:
Expected Sales in Units
+ Desired Units in Ending Inventory
= Total Units Needed
– Estimated Units in Beginning Inventory
Total Units to be Produced
Explain that the ending inventory provides a cushion in case sales exceed projections or production falls
short of the budget. It also gives the company units to sell at the beginning of the following budget period.
Demonstrate this budget using the following information:
Miles Manufacturing has prepared the following sales budget for the first four months of
the year:
January February March April
Sales 20,000 22,000 25,000 21,000
Miles estimates that it will begin the year with 3,000 units in inventory. The company
wants to end each month with inventory equal to 25 percent of the next month’s projected
sales. Prepare a production budget for January through March.
January February March
Expected Sales in Units 20,000 22,000 25,000
Desired Units for Ending Inventory 5,500 6,250 5,250
Total Units Needed 25,500 28,250 30,250
Estimated Units in Beg. Inventory 3,000 5,500 6,250
Total Units to be Produced 22,500 22,750 24,000
Note that the ending inventory of one month becomes the beginning inventory of the following month.
GROUP LEARNING ACTIVITY—Direct Materials Purchases Budget
The direct materials purchases budget follows the same basic format as the production budget. The only
modification is that this budget must be prepared in both units and dollars because the cost of materials
purchased is used in the cost of goods sold budget.
414 Chapter 22 Budgeting
The direct materials purchases budget is prepared as follows:
Materials Required for Production
+ Desired Ending Materials Inventory
– Estimated Beginning Materials Inventory
= Direct Materials to Be Purchased
Unit Price
= Total Direct Materials Purchases
Divide your class into small groups. Ask students to prepare a direct materials purchases budget for Miles
Manufacturing for January and February, using their notes from the preceding demonstration problem and
the following additional information:
1. Each unit requires two pounds of materials.
2. Materials cost $0.60 per pound.
3. Miles estimates that it will have 4,000 pounds of materials inventory on January 1.
4. Miles’ desired ending inventory for materials is 5,000 pounds.
The solution to this activity is presented on TM 22-8.
LECTURE AID—Direct Labor and Overhead Budgets
Because the direct labor and overhead budgets are used in the cost of goods sold budget, you may want to
quickly review their format.
The direct labor cost budget is prepared as follows:
Units to Be Produced (from production budget)
Hours Required per Unit
= Total Hours Required for Production
Hourly Rate
= Total Direct Labor Cost
A direct labor budget is illustrated in text Exhibit 12. Emphasize that the production and direct labor
budgets must be closely coordinated. If a failure to properly budget labor time results in a labor shortage,
the business may be forced to pay significant amounts of overtime, delay production, or use untrained
workers whose output is poor in quality.
To prepare an overhead budget, expected overhead costs are listed and totaled. Exhibit 13 illustrates an
overhead budget. Point out that real-world organizations normally have detailed schedules to support each
item presented on an overhead budget.
Chapter 22 Budgeting 415
GROUP LEARNING ACTIVITY—Cost of Goods Sold Budget
The cost of goods sold budget is complex enough to merit a brief explanation plus an in-class practice
problem. Use TM 22-9 to review the basic format of the cost of goods sold budget. This TM emphasizes
that the budget combines the calculation of three amounts: (1) total manufacturing costs, (2) cost of goods
manufactured, and (3) cost of goods sold. Keep in mind that since this edition of the textbook emphasizes
the perpetual inventory system, your students will not have practiced calculating cost of goods sold. They
also have not previously seen the cost of goods manufactured statement.
While reviewing TM 22-9, stress the sources for the following information:
Information Source
Beginning Finished Goods Inventory Management’s estimate
Beginning Work in Process Inventory Management’s estimate
Beginning Direct Materials Inventory Direct materials purchases budget
(no. of units unit price)
Direct Materials Purchases Direct materials purchases budget
Ending Direct Materials Inventory Direct materials purchases budget
(no. of units unit price)
Direct Labor Direct labor cost budget
Factory Overhead Factory overhead cost budget
Ending Work in Process Inventory Management’s desired ending inventory
Ending Finished Goods Inventory Management’s desired ending inventory
Handout 22-1 presents information that your students can use to practice preparing a cost of goods sold
budget. Ask them to complete this budget as a group activity. The solution is displayed on TM 22-10.
OBJECTIVE 5
Prepare financial budgets for a manufacturing company.
SYNOPSIS
Operating budgets reflect the operating activities of the company; the financial budgets reflect the
financing and investing activities. Two of these are the cash budget and the capital expenditures budget.
The cash budget covers both the inflows and outflows of cash. The primary source of cash receipts is
from cash sales and collection on account. Using the sales budget, cash receipts are estimated for each
month. To estimate cash payments, budgeted cash payments for any month are the sum of the cash paid
from the previous month’s manufacturing costs and the cash from the current month’s manufacturing
costs. Add to these costs, estimated payments for selling and administrative expenses, interest expense,
income taxes, and any capital payments to complete the estimated cash payments. The completed cash
budget showing both cash receipts and cash payments is in Exhibit 19. The capital expenditures budget
summarizes plans for acquiring fixed assets. Capital expenditures budgets are often prepared for five to
ten years.
416 Chapter 22 Budgeting
Key Terms and Definitions
• Capital Expenditures Budget – The budget summarizing future plans for acquiring plant
facilities and equipment.
• Cash Budget – A budget of estimated cash receipts and payments.
Relevant Example Exercises and Exhibits
• Example Exercise 22-6 Cash Budget
• Exhibit 17 – Schedule of Collections from Sales
• Exhibit 18 – Schedule of Payments for Manufacturing Costs
• Exhibit 19 – Cash Budget
• Exhibit 20 – Capital Expenditures Budget
SUGGESTED APPROACH
The two balance sheet budgets presented under this objective are the cash budget and the capital
expenditures budget. The capital expenditures budget, which summarizes plans for acquiring fixed assets,
is illustrated in Exhibit 20 in the text. Refer your students to this illustration. Emphasize that most
companies budget capital expenditures for several years into the future, due to the large dollar amounts
associated with these expenditures and the variation in need for capital improvements from year to year.
The cash budget is very important because managers must effectively manage cash to maintain a
favorable credit rating, keep borrowing costs to a minimum, and maximize investment income. A sample
cash budget is illustrated in text Exhibit 19. Review the basic outline of the cash budget using TM 22-11.
Emphasize that the final line of the budget (excess or deficiency) allows companies to gauge whether they
will need to arrange for a line of credit to meet cash shortages or whether they will have excess cash to
invest. Next, use the group learning activities below to guide students through the calculation of cash
receipts and cash payments.
GROUP LEARNING ACTIVITY—Cash Receipts
The portion of the cash budget that tends to be the most difficult for students is determining the cash
receipts from sales. The difficulty occurs because credit sales are frequently collected over two or more
months.
TM 22-12 presents information for your students to use in preparing the cash receipts portion of a cash
budget. This TM contains data and a basic “shell” format for determining the collections on credit sales.
Divide the class into groups and ask them to complete this exercise. TM 22-13 shows the correct solution.
GROUP LEARNING ACTIVITY—Cash Payments
TMs 22-14 and 22-15 present an opportunity for your students to practice preparing a schedule of cash
payments. Prior to assigning this activity, remind students that financial accounting recognizes expenses
when they are incurred, not when they are paid. A cash budget reports expenses in the month they are
paid. The solution to this exercise is shown on TM 22-16.
Handout 22-1
Cost of Goods Sold Budget
The following are the direct materials purchases, direct labor cost, and factory overhead
budgets for Bowerman Corporation for the month of August.
Direct Materials Purchases Budget
Material A Material B
Units required for production 20,000 14,000
Plus desired ending inventory 8,000 2,500
Total 28,000 16,500
Less estimated beginning inventory 7,400 3,000
Units to be purchased 20,600 13,500
Unit price $0.50 $1.20
Total direct materials purchases $10,300 $16,200
Direct Labor Cost Budget Factory Overhead Cost Budget
Hours required for production 5,000 Supervisor salaries $18,000
Hourly rate $10 Utilities 3,500
Total direct labor cost $50,000 Depreciation 7,400
Indirect materials 2,100
Total factory overhead cost $31,000
Bowerman also estimates the following beginning and ending inventory amounts.
Beginning Inventory Ending Inventory
Work in Process $35,000 $30,000
Finished Goods 87,000 90,000
Required: Prepare a cost of goods sold budget for Bowerman Corporation.
Type Item Description LO(s) Difficulty Time Est BUSPROG AICPA ACBSP – APC Bloom’s EE Excel GL SMH FAI Service Real World Writing Ethics Internet Group
DQ 1 1 Easy 5 min. Analytic Measurement Budgeting and Responsibility Remembering
DQ 2 1 Easy 5 min. Analytic Measurement Budgeting and Responsibility Remembering
DQ 3 1 Easy 5 min. Analytic Measurement Budgeting and Responsibility Remembering
PE 3A Direct materials purchases budget 4 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 3B Direct materials purchases budget 4 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 4A Direct labor cost budget 4 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 4B Direct labor cost budget 4 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 5A Cost of goods sold budget 4 Easy 10 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 5B Cost of goods sold budget 4 Easy 10 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 6A Cash budget 5 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
PE 6B Cash budget 5 Easy 5 min. Analytic Measurement Budgeting and Responsibility Applying x
EX 1 Personal budget 2,5 Easy 15 min. Analytic Measurement Budgeting and Responsibility Applying x x x
EX 2 Flexible budget for selling and administrative expense 2,4 Easy 20 min. Analytic Measurement Budgeting and Responsibility Applying x x
EX 3 Static budget vs. flexible budget 2,4 Easy 20 min. Analytic Measurement Budgeting and Responsibility Applying x x x
EX 4 Flexible budget for Fabrication department 2 Easy 15 min. Analytic Measurement Budgeting and Responsibility Applying x x
EX 5 Production budget 4 Easy 15 min. Analytic Measurement Budgeting and Responsibility Applying x
EX 6 Sales and production budgets 4 Easy 20 min. Analytic Measurement Budgeting and Responsibility Applying x x
EX 7 Professional fees earned budget 4 Easy 10 min. Analytic Measurement Budgeting and Responsibility Applying
EX 8 Professional labor cost budget 4 Easy 10 min. Analytic Measurement Budgeting and Responsibility Applying
EX 9 Direct materials purchases budget 4 Moderate 20 min. Analytic Measurement Budgeting and Responsibility Applying x x
EX 10 Direct materials purchases budget 4 Moderate 20 min. Analytic Measurement Budgeting and Responsibility Applying
EX 11 Direct materials purchases budget 4 Moderate 20 min. Analytic Measurement Budgeting and Responsibility Applying x
PR 1A Forecast sales volume and sales budget 4 Moderate 1.5 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 2A Sales, production, direct materials purchases, and direct labor cost budgets 4 Moderate 2 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 3A Budgeted income statement and supporting budgets 4 Challenging 2.5 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 4A Cash budget 5 Challenging 2 hours Analytic Measurement Budgeting and Responsibility Applying x x x
PR 5A Budgeted income statement and balance sheet 4,5 Challenging 2 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 1B Forecast sales volume and sales budget 4 Moderate 1.5 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 2B Sales, production, direct materials purchases, and direct labor cost budgets 4 Moderate 2 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 3B Budgeted income statement and supporting budgets 4 Challenging 2.5 hours Analytic Measurement Budgeting and Responsibility Applying x
PR 4B Cash budget 5 Challenging 2 hours Analytic Measurement Budgeting and Responsibility Applying x x x
PR 5B Budgeted income statement and balance sheet 4,5 Challenging 2 hours Analytic Measurement Budgeting and Responsibility Applying x
CP 1 Ethics and professional conduct in business 1 Moderate 20 min. Ethics Measurement Budgeting and Responsibility Analyzing x x x
CP 2 Evaluating budgeting systems 1,2 Moderate 20 min. Analytic Measurement Budgeting and Responsibility Evaluating x
CP 3 Service company static decision making 2 Moderate 15 min. Analytic Measurement Budgeting and Responsibility Applying x
CP 4 Objectives of the master budget 3 Easy 15 min. Analytic Measurement Budgeting and Responsibility Analyzing x
CP 5 Integrity and evaluating budgeting systems 3 Moderate 20 min. Analytic Measurement Budgeting and Responsibility Evaluating x
CP 6 Budget for a state budget 2 Moderate 1 hour Analytic Measurement Budgeting and Responsibility Applying
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