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Ch 11: Budgeting

About This Chapter

Read through the brief lessons in this chapter to brush up on budgeting. Use the quizzes in each lesson to measure your understanding of the main points in this chapter.

Budgeting - Chapter Summary and Learning Objectives

Budgeting is essential for the decision making processes of an organization. Everything from the order of budget preparation to the process of preparation must be taken into account when managers budget. This chapter on budgeting is your guide to budgets and procedures for creating budgets. Instructors will use engaging lessons to illustrate the budget information you need to know. Quizzes at the end of each lesson help you gauge your understanding of the material. In this chapter, you'll learn about topics including:

  • Budgeting essentials
  • The first budgets that businesses must produce
  • How to develop budgets, including materials budgets and labor budgets
  • What the Budgeted Income Statement is and why it is essential
  • The factors that influence budgeting

Lesson Objective
Effective Budgeting: Advantages & Essentials Compare the benefits of budgeting, and describe the essentials for an effective budget.
Master Budget in Accounting: Definition, Components & Example Explain the major components of a master budget, and look at examples.
What Is Operating Budget? - Definition & Examples Summarize the process of creating an operating budget, and figure out how they can help businesses.
Sales Budget: Definition & Examples Distinguish why the sales budget comes first, and learn why accuracy is essential with this budget.
Production Budget: Preparation & Examples Formulate how production budgets are developed and where they are derived from.
Preparing a Direct Materials Budget Prepare a direct materials budget, and learn how it fits in with other budgets in the budgeted income statement and balance sheet.
Direct Labor Budget: Definition, Example & Formula Develop direct labor budget to better understand its importance.
Manufacturing Overhead Budget: Definition & Preparation Describe the process of preparing a manufacturing overhead budget.
Preparing a Selling & Administrative Expense Budget Explain the process of preparation for a selling and administrative expense budget.
Preparing a Budgeted Income Statement Demonstrate how a budgeted income statement is prepared and the ways in which it helps managers.
Capital Expenditure Budget: Definition & Preparation Detail the procedure for preparing a capital expenditure budget.
Cash Budget: Definition & Examples Create a cash budget, and describe each of its sections.
Preparing & Formatting a Budgeted Balance Sheet Analyze the budgeted balance sheet, and explain why it is important in decision making processes.
Major Factors Influencing the Budgeting Process Distinguish the factors that influence the budgeting process, including organizational structure and cost centers.

14 Lessons in Chapter 11: Budgeting
Test your knowledge with a 30-question chapter practice test
Effective Budgeting: Advantages & Essentials

1. Effective Budgeting: Advantages & Essentials

Budgets are among the most mentioned types of business documents, but why even bother with them? In this lesson, we'll look at the advantages of a good budget as well as essentials every budget should have.

Master Budget in Accounting: Definition, Components & Example

2. Master Budget in Accounting: Definition, Components & Example

In this lesson, we'll outline the major components of a master budget and look at an example that shows how a company's individual budgets relate to each other and can be used to form a strategic plan for a company.

What Is Operating Budget? - Definition & Examples

3. What Is Operating Budget? - Definition & Examples

What are operating budgets? In this lesson, learn about how operating budgets are created and explore how they can be used to help businesses succeed. Some examples will be given.

Sales Budget: Definition & Examples

4. Sales Budget: Definition & Examples

The sales budget is often the first document that a company produces for accounting purposes, and is also one of the most important ones to be made. Learn all about it in this lesson on sales budgets.

Production Budget: Preparation & Examples

5. Production Budget: Preparation & Examples

Every time a company creates a sales budget, a production budget can't be too far behind. In this lesson, we look at the importance of the production budget and why it is always the second budget created.

Preparing a Direct Materials Budget

6. Preparing a Direct Materials Budget

One of the most important budgets that a company puts together is the direct materials budget. Not only does it show how many raw materials are required, but also the cost for producing the goods a company makes.

Direct Labor Budget: Definition, Example & Formula

7. Direct Labor Budget: Definition, Example & Formula

Companies require plenty of budgets, but one of the most important is the direct labor budget. In this lesson, we see how it is used to do everything from planning vacations to hiring new employees.

Manufacturing Overhead Budget: Definition, Preparation & Example

8. Manufacturing Overhead Budget: Definition, Preparation & Example

In this lesson you'll learn how to make a manufacturing overhead budget for your business. Learn what things you need to include and what things are linked to other budgets.

Preparing a Selling & Administrative Expense Budget

9. Preparing a Selling & Administrative Expense Budget

Even though it has nothing to do with the actual manufacture of goods, a selling and administrative expense budget is often one of the largest budgets that a company produces. Learn more about selling and administrative expense budgets in this lesson.

Preparing a Budgeted Income Statement

10. Preparing a Budgeted Income Statement

One of the most important statements that a company produces is the budgeted income statement. In this lesson, learn how it is made, why it is so important, and what companies can learn from these statements.

Capital Expenditure Budget: Definition & Preparation

11. Capital Expenditure Budget: Definition & Preparation

Since companies must constantly upgrade and update their equipment, it's no surprise that the capital expenditure budget is one of the most important documents that a company will produce. Learn more about it in this lesson.

Cash Budget: Definition & Examples

12. Cash Budget: Definition & Examples

In this lesson you will learn about cash budgets and the various components of a budget. You will also be provided with an example of a simple cash budget.

Preparing & Formatting a Budgeted Balance Sheet

13. Preparing & Formatting a Budgeted Balance Sheet

One of the most important documents that a business can produce is the budgeted balance sheet. In this lesson, we'll learn how to make one, as well as what each section contains and where the numbers come from.

Major Factors Influencing the Budgeting Process

14. Major Factors Influencing the Budgeting Process

A great deal of work goes into preparing a budget. In this lesson, we'll look at influences on a budget, ranging from how the structure of the organization affects the process to the role of responsibility centers.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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