Self-Study
14
Overview
Finance
There are no prerequisites.

Course Description

It can be extremely difficult to assemble all of the information needed for a creditable corporate budget in a timely manner and then continue to refer back to it throughout the budget period. Many companies become so frustrated with the process that they implement an oppressive, top-down system of adherence to the budget or - at the other extreme - give up budgeting altogether.

This course addresses all aspects of the budgeting conundrum - how to create a budget, whether there are variations on the concept that may work better, and how to operate without any budget at all. This course also covers capital budgeting, flexible budgeting, zero-base budgeting, and all of the procedures, controls, and reports needed for a functioning budget system. With detailed descriptions of budgeting systems, reports, and controls, this course will benefit both beginning and experienced accountants alike.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Finance
Sep 20, 2017
There are no prerequisites.
SS3141179
304
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Identify the purpose of budgeting, citing advantages and disadvantages
  • Specify the areas within an organization where there is a bureaucracy supporting the use of budgeting

Chapter 2

  • Identify the components of cost-volume-profit analysis, noting the relationship between costs, unit volumes, and profitability as well as ways that this type of analysis can be used
  • Determine the number of units sold as well as the sales mix variance given a set of circumstances

Chapter 3

  • Identify the types of budgets that are included in the system of budgets, noting key elements as well as their intended purpose
  • Recognize the operating decisions that can impact the system of budgets as well as reasons for budget iterations

Chapter 4

  • Recognize the possible formats for the revenue budget, noting who is responsible for this type of budget, how it is used, and potential reporting issues
  • Cite sources of information for the revenue budget, the impact of pacing, and the inherent variability of this type of budget

Chapter 5

  • Identify the components of the ending finished goods inventory budget, noting the impact of different decisions on the amount of finished goods inventory on hand

Chapter 6

  • Recognize the mechanics of the production model, noting process of compiling the production budget as well as issues to consider during construction that can impede its realization

Chapter 7

  • Define direct materials and a bill of materials, noting the calculation for direct material purchases
  • Identify ways to compile a direct materials budget, noting several anomalies to be aware of when creating this budget

Chapter 8

  • Define direct labor and identify the components of the direct labor budget
  • Recognize the different methods available for compiling a direct labor budget, noting when these methods are used and their impact on efficiency levels

Chapter 9

  • Specify the line items used in the manufacturing overhead budget, noting the classification and nature of these costs 

Chapter 10

  • Identify the source budgets from which a cost of goods sold budget is derived from, noting additional line items to include as well as reasons for changes in the expense

Chapter 11

  • Identify sales and marketing activities that can affect revenue, as well as the methods used to compile and present the sales and marketing budget
  • Note when a sales and marketing budget is the most useful and cite an example of how pacing applies to the sales function

Chapter 12

  • Note the structure and components of the research and development budget as well as its its impact on funding decisions and project selection
  • Recognize the causes of product stagnation, noting the importance of reviewing budget effectiveness

Chapter 13

  • Recognize the layout and contents of an administration budget, identifying line items typically found in this budget and ways that administration costs may vary in response to certain activities

Chapter 14

  • Identify the methods to review capital budgeting proposals, noting the proper use for each analysis or strategy as well as its impact on purchase of a fixed asset

Chapter 15

  • Recognize the components that comprise a compensation budget, a benefits budget, a headcount budget, noting the relationship between budgets and bonus compensation and whether bonuses should be included or not

Chapter 16

  • Recognize the components that comprise a master budget, noting factors that impact budgeted asset and liability levels

Chapter 17

  • Identify the unique components and line items found in revenue budgets, management and administration budgets, fundraising, and program and grant budgets for nonprofits

Chapter 18

  • Recognize the function of a flexible budget, citing its advantages and disadvantages

Chapter 19

  • Recognize situations in which costs can vary and when these costs are more likely to be fixed

Chapter 20

  • Recognize the function and components of incremental budgeting and zero-base budgeting, noting the developmental processes for each and applicable advantages or problems
  • Specify the nature and function of conditional budgeting

Chapter 21

  • Identify the reporting systems, goal setting, management roles, compensation issues, and other changes needed to operate without a budget 

Chapter 22

  • Recognize the focus and function of a rolling forecast, noting the components of a continuous budget variation

Chapter 23

  • Identify the procedural steps needed to create a budget, including those steps needed to prevent budget slippage and calculation errors

Chapter 24

  • Identify techniques to help with error reduction, data verification, and both model and process simplification to increase the level of efficiency in the budgeting process, noting the impact of simplification over time, process efficiencies, and participative budgeting

Chapter 25

  • Identify variances that can be used to compare a budget to actual results

Chapter 26

  • Identify the controls that can accompany a budgeting process, noting the intended purpose for the controls


Table of Contents

Chapter 1 – Introduction to Budgeting

Learning Objectives

Introduction

The Advantages of Budgeting

The Disadvantages of Budgeting

Capital Budgeting Problems

The Command and Control System

Behavioral Impacts

Bureaucratic Support

Information Sharing

Summary

Chapter 1 – Review Questions

Chapter 2 – Cost-Volume-Profit Analysis

Learning Objectives

Introduction

Contribution Margin

Contribution Margin Income Statement

Breakeven Point

Margin of Safety

Cost-Volume-Profit Analysis

Sales Mix

Summary

Chapter 2 – Review Question

Chapter 3 – The System of Budgets

Learning Objectives

Introduction

The System of Budgets

The System of Budgets for a Multi-Division Company

Operating Decisions Impacting the System of Budgets

The Reasons for Budget Iterations

The Number of Budget Scenarios

Summary

Chapter 3 – Review Questions

Chapter 4 – The Revenue Budget

Learning Objectives

Introduction

Overview of the Revenue Budget

The Detailed Revenue Budget

Responsibility for Revenue Information

Sources of Revenue Information

The Impact of Pacing on the Revenue Budget

The Inherent Variability of the Revenue Budget

Summary

Chapter 4 – Review Question

Chapter 5 – The Ending Finished Goods Inventory Budget

Learning Objectives

Introduction

Ending Inventory Assumptions

Impact of Changes in Ending Inventory

The Ending Finished Goods Inventory Budget

Summary

Chapter 5 – Review Questions

Chapter 6 – The Production Budget

Learning Objectives

Introduction

The Production Budget

Other Production Budget Issues

Budgeting for Multiple Products

Summary

Chapter 6 – Review Questions

Chapter 7 – The Direct Materials Budget

Learning Objectives

Introduction

The Direct Materials Budget (Roll up Method)

The Direct Materials Budget (Historical Method)

The Direct Materials Budget (80/20 Method)

Anomalies in the Direct Materials Budget

The Role of the Direct Materials Budget

Summary

Chapter 7 – Review Questions

Chapter 8 – The Direct Labor Budget

Learning Objectives

Introduction

The Direct Labor Budget (Traditional Method)

The Direct Labor Budget (Crewing Method)

The Direct Labor Budget for Manufacturing Cells

The Cost of Direct Labor

Anomalies in the Direct Labor Budget

Summary

Chapter 8 – Review Question

Chapter 9 – The Manufacturing Overhead Budget

Learning Objectives

Introduction

The Manufacturing Overhead Budget

Overhead Allocation between Periods

Additional Issues

Summary

Chapter 9 – Review Questions

Chapter 10 – The Cost of Goods Sold Budget

Learning Objectives

Introduction

The Cost of Goods Sold Budget

Summary

Chapter 10 – Review Questions

Chapter 11 – The Sales and Marketing Budget

Learning Objectives

Introduction

Types and Timing of Sales and Marketing Expenses

Structure of the Sales and Marketing Budget

Sources of Sales and Marketing Expense Information

Analysis of the Sales and Marketing Budget

Diminishing Returns Analysis

Sales and Marketing Pacing

The Impact of Bottlenecks on the Sales and Marketing Budget

Sales and Marketing Metrics

Summary

Chapter 11 – Review Questions

Chapter 12 – The Research and Development Budget

Learning Objectives

Introduction

General Funding for Research and Development

Research and Development Funding Decisions

Expected Commercial Value

Project Risk

Project Selection Issues

The Project Failure Rate

Structure of the Research and Development Budget

Ongoing Project Analysis

Research and Development Measurements

Treatment of Cancelled Projects

Summary

Chapter 12 – Review Questions

Chapter 13 – The Administration Budget

Learning Objectives

Introduction

The Administration Budget

Cost Variability in the Administration Budget

Allocation of Administration Expenses

Service-Based Costing

Summary

Chapter 13 – Review Questions

Chapter 14 – The Capital Budget

Learning Objectives

Introduction

Overview of Capital Budgeting

Bottleneck Analysis

Net Present Value Analysis

The Payback Method

Capital Budget Proposal Analysis

The Outsourcing Decision

The Capital Budgeting Application Form

The Post-Installation Review

The Lease versus Buy Decision

Capital Budgeting with Minimal Cash

Summary

Chapter 14 – Review Questions

Chapter 15 – The Compensation Budget

Learning Objectives

Introduction

The Compensation Budget

The Treatment of Hourly Pay and Overtime

The Benefits Budget

The Headcount Budget

The Link between Budgets and Bonus Compensation

Summary

Chapter 15 – Review Questions

Chapter 16 – The Master Budget

Learning Objectives

Introduction

The Budgeted Income Statement

Components of the Budgeted Balance Sheet

Accounts Receivable

Inventory

Fixed Assets

Accounts Payable

Additional Estimation Elements

The Cash Line Item

The Financing Budget

The Budgeted Balance Sheet

Accompanying Documentation

Summary

Chapter 16 – Review Questions

Chapter 17 – Nonprofit Budgeting

Learning Objectives

Introduction

The Revenue Budget

The Management and Administration Budget

The Fundraising Budget

Program and Grant Budgets

Summary

Chapter 17 – Review Question

Chapter 18 – Flexible Budgeting

Learning Objectives

Introduction

The Flexible Budget

The Flexible Budget Variance

Advantages of Flexible Budgeting

Disadvantages of Flexible Budgeting

Summary

Chapter 18 Review Questions

Chapter 19 – Cost Variability

Learning Objectives

Introduction

Mixed Costs

Labor-Based Fixed Costs

Costs Based on Purchase Quantities

Costs Based on Production Batch Sizing

Cost Based on Step Costs

Time-Based Costs

Experience-Based Costs

Incorporating Cost Variability into Reports

Summary

Chapter 19 – Review Question

Chapter 20 – The Zero-Base Budget

Learning Objectives

Introduction

Incremental Budgeting

Overview of Zero-Base Budgeting

The Zero-Base Budgeting Process

Step 1 - Develop Decision Packages

Step 2 - Rank Decision Packages

Advantages of Zero-Base Budgeting

Problems with Zero-Base Budgeting

Conditional Budgeting

Summary

Chapter 20 – Review Questions

Chapter 21 – Operating without a Budget

Learning Objectives

Introduction

Alternatives to the Budget

Forecasting without a Budget

Capital Budgeting

Goal Setting without a Budget

Strategy without a Budget

Management Guidelines

The Role of Senior Management

Corporate Staff Roles

Board Approvals

Compensation without a Budget

Controls without a Budget

Behavioral Norms

Profit Knowledge

Information Exchange

Hiring, Promotions, and Continuity

Customer Ownership

Service Center Pricing

Accounting Reports

Transfer Pricing

Investor Relations

Implementation of the No-Budget Environment

Summary

Chapter 21 – Review Questions

Chapter 22 – The Rolling Forecast

Learning Objectives

Introduction

The Rolling Forecast Process

The Rolling Forecast Format

Continuous Budgeting

Summary

Chapter 22 – Review Question

Chapter 23 – Budgeting Procedures

Learning Objectives

Introduction

Procedure – Formulation of the Budget

Procedure – Issue Budget Variance Reports

Procedure – Subsequent Account Changes

Summary

Chapter 23 – Review Question

Chapter 24 – Budgeting Efficiencies

Learning Objectives

Introduction

Budget Model Efficiencies

Spreadsheet Error Checking

Verification Opportunities

Simplification Opportunities

Simplification over Time

Budgeting Process Efficiencies

Participative Budgeting

Summary

Chapter 24 – Review Question

Chapter 25 – Budget Reporting

Learning Objectives

Introduction

General Reporting Format

Revenue Reporting

Selling Price Variance

Sales Volume Variance

Overview of Cost of Goods Sold Variance Reporting

The Purchase Price Variance

Material Yield Variance

Labor Rate Variance

Labor Efficiency Variance

Variable Overhead Spending Variance

Variable Overhead Efficiency Variance

Fixed Overhead Spending Variance

Problems with Variance Analysis

Which Variances to Report

How to Report Variances

Summary

Chapter 25 – Review Question

Chapter 26 – Budgeting Controls

Learning Objectives

Introduction

Budget Creation Controls

Budget Integration Controls

Summary

Chapter 26 – Review Question

Review Question Answers and Rationales

Appendix

Glossary

Index

Qualified Assessment

Answer Sheet

Course Evaluation



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