Tài chính kế toán - Chapter 6: Master budget for manufacturing organisations

Chapter 6Master budget for manufacturing organisations1Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldCost classificationsProduct costs are the costs of converting raw materials into a finished product. 1. Raw materials 2. Direct labour 3. Factory overheadPeriod costs are all other costs associated with the business. 1. Marketing expenses 2. General and administration expenses 3. Financial expenses2Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldProduct costsDirect costs:major items of cost that can be relatively easily traced to the product, such as raw materials and direct labour.Raw materialsand direct labour Prime costIndirect costs:cannot not be easilytraced directly to the product. All factory overhead.Factory overhead:all indirect costs of running a factory.Examples: indirect materials, indirect labour, factory insurance.3Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldManufacturing processinputprocessoutputDirectmaterialsDirect labour & factory overheadFinished goods4Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldCost of production requires the preparation of the following budgetsSalesProductionDirect materials usageDirect labourFactory overhead5Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldProduction budget (p. 131)6Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFactory overhead budget (p. 135)7Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldDirect materials and labour budget8Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFactory overhead application rateThis allows the business to charge the product with an estimated amount.Application rate can be calculated on different bases:per unitdirect labour costdirect labour hoursmachine hours.Refer p. 136.9Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldCost of goods sold budgetMerchandising businessstock @ beginningadd net purchasescost of goods available for salelessstock @ endcost of goods sold Manufacturing businessstock @ beginningadd cost of productioncost of goods available for salelessstock @ endcost of goods sold 10Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya Aronfeld