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Budgeting Basics and Beyond

Book Description

If the very thought of budgets pushes your sanity over the limit, then this practical, easy-to-use guide is just what you need. Budgeting Basics and Beyond, Third Edition equips you with an all-in-one resource guaranteed to make the budgeting process easier, less stressful, and more effective. Written by Jae Shim and Joel Siegel, the new edition covers Balanced Scorecard, budgeting for nonprofit organizations, business simulations for executive and management training, and much more!

Table of Contents

  1. Copyright
  2. About the Authors
  3. Preface
  4. The What and Why of Budgeting: An Introduction
    1. Planning
    2. Types of Budgets
    3. Budgetary Process
    4. Budget Coordination
    5. Departmental Budgeting
    6. Actual Costs Versus Budget Costs
    7. Budget Revision
    8. Budget Weaknesses
    9. Budgetary Control and Audit
    10. Computer Applications
    11. Motivation
    12. Advantages and Disadvantages of Budgets
    13. Conclusion
  5. Strategic Planning and Budgeting: Process, Preparation, and Control
    1. Budgeting
    2. Strategic Planning
    3. Short-term Plans
    4. Long-term Plans
    5. Time Period
    6. Administering the Plan
    7. Profit Plan
    8. Operational Plan
    9. Development Plan
    10. Contingency Planning
    11. Activity Budget
    12. Budget Process
    13. Departmental Budgets
    14. Budget Accuracy
    15. Reports
    16. Budget Revision
    17. Performance Measures
    18. Control and Analysis
  6. Administering the Budget: Reports, Analyses, and Evaluations
    1. Types of Reports
    2. Budget Manual
    3. Budget Sheet
    4. Performance Reports
    5. Budget Audit
    6. Budget Calendar
  7. Break-even and Contribution Margin Analysis: Profit, Cost, and Volume Changes
    1. Questions Answered by Break-even and Contribution Margin Analysis
    2. Contribution Margin Income Statement
    3. Impact of Income Taxes
    4. Some Applications of Contribution Margin Analysis and "What-If" Analysis
    5. Sales Mix Analysis
    6. CVP Analysis with Step-function Costs
    7. Conclusion
  8. Profit Planning: Targeting and Reaching Achievable Goals
    1. Goal Congruence
    2. Profit Targets
    3. Objectives in the Profit Plan
    4. Role of Nonfinancial Managers
    5. Assumptions
    6. Alternatives
    7. Responsibility
    8. Participation
    9. Subordinates
    10. Coordination
    11. Scheduling
    12. Problems
    13. Control, Evaluation, and Analysis
    14. Internal Controls
    15. Real-life Illustrations in Profit Planning
    16. Conclusion
  9. Master Budget: Genesis of Financial Forecasting and Profit Planning
    1. Comprehensive Sales Planning
    2. Sales Budget
    3. Monthly Cash Collections from Customers
    4. Production Budget
    5. Inventory Purchases, Merchandising Firm
    6. Direct Material Budget
    7. Direct Labor Budget
    8. Factory Overhead Budget
    9. Ending Finished Goods Inventory Budget
    10. Selling and Administrative Expense Budget
    11. Cash Budget
    12. Budgeted Income Statement
    13. Budgeted Balance Sheet
    14. Some Financial Calculations
    15. Using an Electronic Spreadsheet to Develop a Budget Plan
    16. Financial Forecasting – The Percent-of-Sales Method
    17. Conclusion
  10. Cost Behavior: Emphasis on Flexible Budgets
    1. A Look at Costs by Behavior
    2. Analysis of Mixed (Semivariable) Costs
    3. High-low Method
    4. Regression Analysis
    5. Fixed Budgets versus Flexible Budgets and Performance Reports
    6. Conclusion
  11. Evaluating Performance: The Use of Variance Analysis
    1. Usefulness of Variance Analysis
    2. Standard Setting
    3. Planning Variance
    4. Sales Variances
    5. Cost Variances
    6. Material Variances
    7. Labor Variances
    8. Overhead Variances
    9. Interrelationship of Variances
    10. Mix and Yield Variances for Material and Labor
    11. Profit Variance Analysis
    12. Nonmanufacturing Activities
    13. Illustrative Variance Analysis Report for a Service Business
    14. Variances to Evaluate Marketing Effort
    15. Illustrative Marketing Performance Report
    16. Variances in Administrative Expenses
    17. Capital Expenditures
    18. Variance Analysis Reports
    19. Conclusion
  12. Manufacturing Costs: Sales Forecasts and Realistic Budgets
    1. Illustration
    2. Planning and Control of Material Purchases and Usage
    3. Materials Budgets
    4. Materials Purchase Budget Illustrated
    5. Planning and Control of Direct Labor
    6. Planning and Control of Factory Overhead
    7. Conclusion
  13. Marketing: Budgeting for Sales, Advertising, and Distribution
    1. Marketing Budgets
    2. Selling Expenses
    3. Advertising and Sales Promotion
    4. Distribution Costs
    5. Analysis and Evaluation of Distribution Costs
    6. Control over Distribution Costs
    7. Packaging
    8. Travel and Entertainment
    9. Budget Meetings
    10. Conclusion
  14. Research and Development: Budgets for a Long-term Plan
    1. R&D Costs
    2. R&D Planning
    3. Funding Level
    4. R&D Budget
    5. Coordination
    6. Analysis and Evaluation
    7. Control over R&D
    8. R&D Risk
    9. Conclusion
  15. General and Administrative Costs: Budgets for Maximum Productivity
    1. Budget Process
    2. Headcount Forecast Algorithms
    3. Analysis and Evaluation
    4. Cost Control
    5. Employees
    6. Conclusion
  16. Capital Expenditures: Assets to Be Bought, Sold, and Discarded
    1. Budget Process
    2. Authorization of Capital Budget
    3. Capital Budget Forms
    4. Capital Budget
    5. Capital Expenditure Reports
    6. Budget Revisions
    7. Special Projects
    8. Analysis of Capital Projects
    9. Control over Capital Expenditures
    10. Conclusion
  17. Forecasting and Planning: Reducing Risk in Decision Making
    1. Who Uses Forecasts?
    2. Forecasting Methods
    3. Selection of Forecasting Method
    4. Qualitative Approach
    5. Steps in the Forecasting Process
    6. Conclusion
  18. Moving Averages and Smoothing Techniques: Quantitative Forecasting
    1. Naive Models
    2. Smoothing Techniques
    3. Conclusion
  19. Regression Analysis: Popular Sales Forecast System
    1. Least-Squares Method
    2. A Word of Caution
    3. Regression Statistics
    4. Using Regression on Excel
    5. Conclusion
  20. Cash Budgeting and Forecasting Cash Flow: Two Pragmatic Methods
    1. Account Analysis
    2. Regression Approach
    3. Cash Budget
    4. Cash Variance Analysis
    5. Example 5
    6. Cash Flow Software
    7. A caveat - Perils of spreadsheets
    8. Conclusion
  21. Financial Modeling: Tools for Budgeting and Profit Planning
    1. A Financial Model
    2. Budgeting and Financial Modeling
    3. Use of Financial Modeling in Practice
    4. Developing Financial Models
    5. Conclusion
  22. Software Packages: Computer-based Models and Spreadsheet Software
    1. Use of a Spreadsheet Program for Financial Modeling and Budgeting
    2. Budgeting Software Packages
    3. Latest Generation of Budgeting and Planning Software
    4. Conclusion
  23. Capital Budgeting: Selecting the Optimum Long-term Investment
    1. Accounting (Simple) Rate of Return
    2. Payback Period
    3. Payback Reciprocal
    4. Discounted Payback Period
    5. Net Present Value
    6. Profitability Index
    7. Internal Rate of Return (Time-Adjusted Rate of Return)
    8. Nondiscretionary Projects
    9. Comparison of Methods
    10. Capital Budgeting Process
    11. Capital Budgeting and Inflation
    12. Postaudit Project Review
    13. Capital Budgeting and Nonprofit Organizations
    14. Risk and Uncertainty
    15. Conclusion
  24. Zero-base Budgeting: Priority Budgeting for Best Resource Allocation
    1. Zero-base Budgeting Process
    2. Zero-base Budgeting Effects
    3. Activity Units
    4. Decision Packages
    5. Ranking Proposals
    6. Project (Program) Budgets
    7. Conclusion
  25. Managers' Performance and Balanced Scorecard: Evaluation on the Division Level
    1. Appraising Manager Performance
    2. Responsibility Center
    3. Revenue Center
    4. Cost Center
    5. Profit Center
    6. Investment Center
    7. The Balanced Scorecard
    8. Applying the Balanced Scorecard to a School District
    9. Budgeting and the Balanced Scorecard – A Oxiteno Case Study
    10. The Balanced Scorecard Implementation in Oxiteno
    11. Budgeting and the New Management Model
    12. Conclusion
  26. Budgeting for Service Organizations: Special Features
    1. Airlines
    2. Hotels
    3. Conclusion
  27. Budgeting for Nonprofit Organizations: Diverse Types
    1. Planning
    2. Funds
    3. Recordkeeping and Reporting
    4. Government Budgets and Accounting Bases
    5. Budget Development
    6. Budgeting Revenue
    7. Budgeting Expenditures
    8. Encumbrances
    9. Budgetary Control
    10. Effectiveness and Control Measures
    11. Organizational Structure
    12. Functional or Program Reporting
    13. Budget Adaptability
    14. Budget Participants
    15. Budgeting Aspects for Specific Nonprofits
    16. Conclusion
  28. Using Management Games for Executive Training
    1. The Capstone Business Simulation
    2. Business Scenario
    3. Planning: Long-Range and Short-Term
    4. Tactical Decisions
    5. Proformas: Evaluating Alternative Scenarios
    6. Analysis, Coaching, and Benchmarking
    7. Individual Assessment (Comp-XM)
  29. Present and Future Value Tables
  30. Statistical Table
  31. Glossary of Budgeting and Planning Terms