Budgeting for Profit Planning and Control (11 hrs)

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Course Description

Budgeting for Profit Planning and Control

The course is intended for business professionals engaged in budgeting, financial planning, forecasting, profit planning, and control. A budget is the formal expression of plans, goals, and objectives of management that covers all aspects of operations for a designated time period. The budget is a tool providing targets and direction. Budgets provide control over the immediate environment, help to master the financial aspects of the job and department, and solve problems before they occur. Budgets focus on the importance of evaluating alternative actions before decisions are actually implemented. This course explains what budgets are, how they work, how to prepare and present them, and how to analyze budget figures and results. New developments and uses of budgets such as rolling budgets at various managerial levels within a business are illustrated that combine budgeting, forecasting analytics, business intelligence, and collaboration.

Course Information

Price: $88

Course No. 7089
Format: Online pdf (274 pages). Printed book available.
Author: Delta CPE LLC
Prerequisites: Basic Accounting
Advance Preparation: None
Level: Overview
CPE Credit: 11 hrs.
Field of Study: Finance: Technical
Course expiration:  You have one year from date of purchase to complete the course.
Course Revision Date: January 2023


After studying this course, you should be able to:

• Recognize the different types of budgets
• Identify characteristics and advantages of budgeting
• Recognize how strategic planning and budgeting are linked together
• Identify certain budget measurements
• Distinguish between short-term and long-term plans
• Identify objectives of profit planning
• Recognize metrics in the profit plan
• Recognize the major types of budget reports
• Identify the components of the budget sheet
• Identify examples of variable costs, fixed costs, and mixed costs
• Recognize two methods of developing a flexible budget formula: the high-low method and regression analysis
• Calculate fixed costs and overheard costs
• Distinguish among three types of responsibility centers
• Identify weaknesses of many cost systems
• Identify examples of financial budgets
• Recognize components of overhead
• Recognize the purpose and causes of variance analysis
• Recognize where certain variances arise
• Identify the value of performance reports
• Identify the importance of a reasonable sales budget
• Differentiate between sales planning and sale forecast
• Recognize the procedures for developing advertising budgets and some characteristics of the advertising budget
• Identify some methods of calculating advertising budgets
• Recognize fixed vs. semi-variable vs variable costs
• Understand the applicability of static budgets
• Recognize how the flexible budget formula helps develop the factory overhead budget
• Recognize items included in the budget process for general and administrative (G&A) expenses
• Identify the factors that need to be considered in R&D planning
• Identify factors in considering capital expenditures
• Recognize components of the capital expenditures budget
• Recognize the importance, attributes and components in a cash budgeting system
• Identify advantages of using “what-if” scenarios when budgeting
• Recognize the steps involved in zero-base budgeting and how often it should be conducted
• Recognize what is involved in a decision package
• Recognize the special features associated with planning and budgeting for service businesses
• Identify the unique features and characteristics of governmental and nonprofit organizations (NPOs)

Course Contents

Chapter 1: The What and Why of Budgeting
Types of Budgets
Master Budget
Operating and Financial Budgets
Cash Budget
Static (Fixed) Budget
Flexible (Expense) Budget
Capital Expenditure Budget
Program Budget
Incremental Budget
Add-On Budget
Supplemental Budget
Bracket Budget
Stretch Budget
Strategic Budget
Activity-Based Budget
Target Budget
Rolling Budget
Budgetary Process
Bottom-Up Versus Top-Down
Budget Coordination
Departmental Budgeting
Actual Costs vs. Budget Costs
Budget Revision
Budget Weaknesses
Budgetary Control and Audit
Advantages and Disadvantages of Budgets

Chapter 2: Strategic Planning and Budgeting and Planning for Profit
Strategic Planning
Short-Term Plans
Long-Term Plans
Time Period
Profit Planning: Targeting and Reaching Achievable Goals
Goal Congruence
Profit Targets
Objectives In The Profit Plan
Role of Managers
Control, Evaluation, and Analysis
Internal Controls
“Real – Life” Illustrations In Profit Planning

Chapter 3: Administering the Budget: Reports, Analyses, and Evaluations
Learning Objectives
Plans and Planning
Profit Plan
Operational Plan
Development Plan
Contingency Planning
Activity-Based Budget
Budget Process
Departmental Budgets
Budget Accuracy
Budget Revision
Performance Measures
Control and Analysis
Types of Reports
Budget Manual
Budget Sheet
Performance Reports
Budget Audit
Budget Calendar

Chapter 4: Cost Behavior: Emphasis On Flexible Budgets and Contribution Margin
Costs By Behavior
Analysis of Mixed (Semi-Variable) Costs
Relevant Range
The High-Low Method
Regression Analysis
Fixed Budgets Versus Flexible Budgets and Performance Reports
Direct Labor and Variable Overhead
The Contribution Income Statement

Chapter 5: Responsibility Accounting and Reporting To Management
Responsibility Accounting and Responsibility Center
Cost Center Control
Prerequisites of Cost Control
Responsibility and Conventional Accounting Compared
Cost Controllability
Organization Structure
Operation of Responsibility Accounting System
Human Relations In Responsibility Accounting
Reporting Under Responsibility Accounting
Essentials of Good Reporting
Fixing Responsibility
Service Department Costs

Chapter 5 Review Questions
Chapter 6: Master Budget: Genesis of Forecasting and Profit Planning
Learning Objectives
Master (Comprehensive) Budgeting Illustrated
Sales Budget
Production Budget
Materials Requirement Budget
Direct Labor Budget
Factory Overhead Costs Budget
Selling and Administrative Expenses Budget
Cash Receipts Budget
Cash Disbursements Budget
Budgeted Cash Balances
Bank Loans
Budgeted Income Statements

Chapter 6 Review Questions
Chapter 7: Using Variance Analysis to Evaluate Performance
Learning Objectives
Defining A Standard
The Usefulness of Variance Analysis
Determining and Evaluating Sales Variances
Cost Variances
Material’s Variances
Labor Variances
Overhead Variances
The Use of Flexible Budgets in Performance Reports
Standards and Variances In Marketing
Sales Standards
Analyzing Salesperson Variances
Appraisal of Marketing Department
Illustrative Marketing Performance Reports
Variances In Administrative Expenses
Variances In Warehousing Costs
Nonmanufacturing (Service) Activities
An Illustrative Variance Analysis Report For A Service Business
Capital Expenditures
Variance Analysis Reports

Chapter 8: Budgeting Sales Forecasts, and the Sales and Marketing Budget
Learning Objectives
Sales Planning and Forecasting
Sales Forecasts
Sales Budget
The Marketing Budget
Marketing Budgets
Selling Expenses
Advertising and Sales Promotion
Distribution Costs
Analysis and Evaluation of Distribution Costs
Travel and Entertainment
Budget Meetings

Chapter 9: Budgeting Manufacturing Costs
Learning Objectives
The Sales Budget
The Production Budget
The Direct Material Budget
The Direct Labor Budget
The Factory Overhead Budget
Planning and Control of Material Purchases and Usage
Materials Budgets
Budgeting Individual Items of Material
Budget Based On Production Factors
Materials Purchase Budget Illustrated
Planning and Control of Direct Labor
Direct Labor Budget
Labor Reports
Fringe Benefits
Labor Cost Control and Analysis
Planning and Control of Factory Overhead
Types of Overhead Costs
Total Cost Management
Static Versus Flexible Budget
Control and Analysis

Chapter 10: Budgeting General and Administrative Expenses and R&D Costs
Learning Objectives
Administrative Departments
Budgeting Process
Cost Classification
Compensation Arrangements
Financial Expenses
Other Expenses
Control and Analysis
Budgeting for Research and Development Costs
R&D Costs
R&D Planning
Funding Level
R&D Budget
Analysis and Evaluation
Control Over R&D
R&D Risk
Budgeting for Capital Expenditures
The Budget Process
Authorization of Capital Budget
Capital Budget Forms
Capital Budget
Capital Expenditure Reports
Budget Revisions
Special Projects
Analysis of Capital Projects

Chapter 11: Cash Flow Forecasting and Budgeting
Learning Objectives
Account Analysis
Total cash receipts
The Cash Budget
Cash Variance Analysis
Cash Flow Software and Spreadsheets
Construction of a Rolling Budget
Budgeting Software

Chapter 12: Zero-Base Budgeting: Priority Budgeting for Best Resource Allocation
Learning Objectives
The Zero-Base Budgeting Process
Activity Units
Decision Packages
Ranking Proposals
Project (Program) Budgets

Chapter 13: Budgeting for Service Businesses and Nonprofit Organizations
Learning Objectives
Service Organizations
Nonprofit Organizations
Recordkeeping and Reporting
Government Budgets and Accounting Bases
Government Recordkeeping for Budget Accountability
Government Interfund Transactions
Capital and Operating Budgets
Budget Development
Budgeting Revenue
Budgetary Control
Effectiveness and Control Measures
Organization Structure
Functional or Program Reporting
Budget Adaptability
Budget Participants
Voluntary Hospitals
Colleges and Universities
Professional Associations

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