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Strategy and the master budget - Coggle Diagram
Strategy and the master budget
BUDGET (formal expression of
a plan for future action
Financial or non financial expression of an organizations
plan of action for a certain period, formal expressions of future plans
Identifies the resources and commitments requiered to achieve the goals
Its process is called budgeting (projecting operations and their financial impact)
Its preparation helps work out problems the company may have
Activities and results delineated by the budget
Serve as frames of reference
Continuous rolling budget= budget system for months, quarters or years
Guidelines= set the tone for budget
Budget proposals consider new products or new manufacturing processes (internal) and threat of entry or suppliers (external)
Budgets are examined; goals need to be reachable
Revisions can occur under special circumstances
STRATEGY (path to long-term goals and missions)
Evaluation of internal and external factors; to identify opportunities and limitations
Provides the framework within which a long-range plan is developed (5-10 years)
CAPITAL BUDGETING (process for evaluating long-term strategic projects and their financing)
MASTER BUDGET (operating and financial plans for a specific period)
Short term objectives into action steps
OPERATING BUDGET (plans for all phases of operation)
FINANCIAL BUDGET (identify sources and uses of funds for budgeted operations)
SALES BUDGET (expected sales in units at their expected selling prices)
Take into account current sales and pricing policies, trend analysis and econometric models
PRODUCTION BUDGET (planned production for a given period)
Company policies may affect
For the labor budget, this is used to have the right number of skilled employees for the production activity, it helps avoid emergency hiring
MERCHANDISE PURCHASES BUDGET (merchandise that needs to be purshased during the period)