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Accounting Final. Essay

816 words - 3 pages

Prepare a sales budget, including schedule of expected cash receipts. The sales budget forms the foundation for the master budget. It provides details concerning the anticipated units and dollar sales for each budget period. The schedule of excepted cash receipts is based on the sales budget, the expected breakdown between cash and credits sales, and the expected pattern of collections on credit sales.Prepare a production budget. The production budget details how many units must be produced each budget period to satisfy expected sales and to provide for adequate levels of finished goods inventories.Prepare a direct materials budget, including a schedule of expected cash disbursements for purchases of materials. The direct materials budget shows the materials that must be purchased each budget period to meet anticipated production requirements and to provide for adequate levels of materials inventories. Cash disbursements for purchases of materials will depend on the amount of materials purchased in each budget period and the company's policies concerning payments to suppliers for materials acquired on credit.Prepare a direct labor budget. The direct labor budget shows the direct labor hours that are required to meet the production schedule as detailed in the production budget. The direct labor hour requirements are used to determine the direct labor cost in each budget period.Prepare a manufacturing overhead budget. Manufacturing overhead consists of both variable and fixed manufacturing overhead. The variable manufacturing overhead ultimately depends on the number of units produced from the production budget. The variable and fixed manufacturing overheads are combined to determine the total manufacturing overhead. Any noncash-manufacturing overhead such as depreciation is deducted from the total manufacturing overhead to determine the cash disbursements for manufacturing overhead.Prepare a selling and administrative expense budget. Like manufacturing overhead, selling and administrative expenses consist of both variable and fixed expenses. The variable expenses depends on the number of units sold or some other measure of activity. The variable and fixed expenses are combined to determine the total selling and administrative expense. Any noncash selling and administrative expenses such as depreciation are deducted from the total to determine the cash disbursement for selling and administrative expenses.Prepare a cash budget. The cash budget is a critical element of the master budget. It permits managers to anticipate and plan for cash shortfalls. The cash budget is organized into a receipts section, a disbursements...

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