Corporate Budgeting

Corporate Budgeting

PART-1 Accounting Analysis Ballarat Furniture Company's budget for 2013:

Sales Budget

Ballarat Furniture Company's

Sales Budget

For the Year Ended 2013

Sales Volume

52000

Sales Price

$392

Total Sales

$20,384,000

Production Budget (in Units)

Ballarat Furniture Company's

Production Budget (in Units)

For the Year Ended 2013

Budgeted Sales Units

52000

Ending Units

3000

Beginning Units

-5000

Production Units

50000

Direct Material Usage Budget

Ballarat Furniture Company's

Direct Material Usage Budget

For the Year Ended 2013

Budgeted Production in Units

50000

* Direct Material Per Unit (bf.)

19

Direct Material Required for Production (bf.)

950000

Ending Direct Material

40000

Beginning Direct Material

-45000

Budgeted Direct Material Purchases

945000

Cost per board feet

$10

Budgeted Direct Material Purchase in $

$9,450,000

Direct Labor Budget

Ballarat Furniture Company's

Direct Labor Budget

For the Year Ended 2013

Production Units

50000

* Direct Labor Hours Per tables

4

Budgeted Direct Labor Hours

200000

*Cost per Direct Labor Hours

$55

Budgeted Direct Labor Costs

$11,000,000

Budgeted Cost of Goods Sold

Ballarat Furniture Company's

Cost of Goods Sold Budget

For the Year Ended 2013

Beginning Finished Goods

$1,375,000

Material

Beginning Material

$436,500

Purchases

$9,450,000

Less: Ending Material

($400,000)

Cost of Direct Material Placed in Production

$9,486,500

Direct Labor

$11,000,000

Fixed Overhead

$1,600,000

Cost of Goods Manufactured

$22,086,500

Less: Finished Goods

($825,000)

Cost of Goods Sold

$22,636,500

Budgeted Income Statement

Ballarat Furniture Company's

Budgeted Income Statement

For the Year Ended 2013

Sales

$20,384,000

Less: Cost of Goods Sold

$22,636,500

Gross Profit

($2,252,500)

Less: Operating Expenses

Salaries of Sales personnel

$555,760

Marketing

$1, 920,720

Distribution

$729,600

Customer service

$504,992

Administrative

$440,768

Total Selling and Administration Expense

$2,231,120

Income from Operations

($4,483,620)

Add: Rebate (40%)

$1,793,448.0

Net Income

($2,690,172.0)

PART -2 Critical Reviews

In this section I will analyze the effects of counterproductive, which is linked with targets and budgets in an organization that produces organization compensation and performance measurement system. I agree with the article that corporate budgeting helps in measuring organizational performance, one can relate it with the target causes of people to address the system in order to conduct value in two main ways, firstly subordinates and superior lie in the formulation of budget with the help of budgeting process that provides unbiased information required to deal with the activities of budgeting process. Purpose of my paper involve the explanation, which may help firms to stop the counterproductive cycle, however key exist in not demolishing the system of budgeting, it changes the way people perception regarding organization (Lalli 2003).

However corporate budget involve several activities, which include preparation of sales budget, purchasing budget, production budget and operating budget, firstly I will discuss sales budget it can b done by using information from the previous year, with a forecast of various assumptions. This type of budget will be used to plan revenue and is the cornerstone of the corporate budget. Secondly, preparation of production budget it allows management to know what to produce and when. Seasonal issues, current inventory levels, staffing issues and other resources will affect the budget (Lazarus 1967). Thirdly, purchasing budget, production budget tells you what to do, however, shopping and budget tells you have to buy in order to do so. The current parts inventory levels, purchase discounts available and seasonal themes affect this budget. Fourthly, it is operating budget this section consists of direct labor and all expenses necessary to operate the facility where the product is made. Operating costs will be higher in the months of high production and lower in low production. Lastly corporate budgeting includes general and administrative expense budget. This part of the ...