Master Budget and Flexible Budgeting

Master Budget and Flexible Budgeting
Master Budget and Flexible Budgeting

We can write this or a similar paper for you! Simply fill the order form!

Master Budget and Flexible Budgeting



Compute and prepare a flexible budget, and then write a 1–2-page comparison of a stable inventory policy and a stable production policy.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

Competency 2: Prepare budgets.

o Apply budgeting process general principles.

o Compute components of flexible budgets.

Master Budget and Flexible Budgeting

Competency 4: Apply cost analysis to assist management decision making.

o Determine factory overhead at varying production levels.

o Analyze the advantages and disadvantages of a stable production policy.

o Analyze the advantages and disadvantages of a stable inventory policy.


For manufacturing companies, labor is a significant cost in the production cycle, from the raw materials stage to shipping of the finished product to the customer. As robotics increasingly replace humans on the assembly line, direct labor costs have become a smaller percentage of total production costs. The transition to robotics has also impacted indirect manufacturing costs, such as depreciation, insurance, and taxes on the robots.

By definition, direct labor is the effort of employees who transform direct materials into a finished product. Meanwhile, indirect labor costs consist of the wages of production employees who do not work directly on the product but are required for the manufacturing facility to operate. These labor costs require the organization to adopt accounting procedures for handling and recording the various payroll costs.

Master Budget and Flexible Budgeting

Questions to Consider

To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.
• Why is it important to distinguish between variable costs and fixed costs for budgeting purposes?
• Why is it important for organizations’ executive leadership to include front line managers in the budgeting process?


The following resources are required to complete the assessment.
The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.

• Cutler, T. R. (2010). The language of cost. Industrial Engineer, 42(9), 47–50.

• Jagolinzer, P. (2000). Cost accounting: An introduction to cost management systems. Cincinnati, OH: South-Western College Publishing.

• Kren, L. (2014). Tracking value created by efficiency improvements in a traditional overhead cost management system. Engineering Management Journal, 26(1), 3–7.

• Lee, R. T. (2013). Target: Carrying costs. Industrial Engineer, 45(8), 38–42.• Marshall, P. D., & Dombrowski, R. F. (2003, February/March). A small business review of accounting for primary products, byproducts and scrap. National Public Accountant, 10–13.

• Pachura, R. (1998). When is enough, enough?. IIE Solutions, 30(10), 33–35.

• Rao, S. S. (1997). ABCs of cost control. Inc. Tech, 19(9), 79–81.

• Rikhardsson, P. M. (2004). Accounting for the cost of occupational accidents. Corporate Social – Responsibility and Environmental Management, 11(2), 63–70.

• The payroll handover. (1997, August). Management Today, 13.
VanDerbeck, E. J. (2013). Principles of cost accounting (16th ed.). Mason, OH: South-Western Cengage Learning.o Chapter 7.

Master Budget and Flexible Budgeting

Assessment Instructions

For this assessment, complete the following two parts:

Part 1: Use the Assessment 3 Template (linked in the Resources) to compute and prepare a flexible budget for Central Manufacturing Company.

Part 2: Using the information in the template, write a 1–2-page Microsoft Word document in which you include the following:
• Analyze the advantages and disadvantages of a (a) stable production policy and (b) stable inventory policy for a company that has greatly fluctuating sales during the year regarding a master budget and a flexible budget.
• Provide support for your response, and follow APA style for citations and references.
Use 12-point font and double space your paper.
Submit both the completed template and the Word document for this assessment

Master Budget and Flexible Budgeting

Below is a partial answer to the above homework questions by one of our writers. If you are interested in a custom non plagiarized top quality answer, click order now to place your order.

Master Budget and Flexible Budgeting Assessment

Production policies put in place by a manufacturing company is meant for a heavy outcome in return.  Stable production policies formulated by the company help guide the production process. Production policy of the manufacturing company allows it to draw a budget that the company can use to measure its performance. Stable production costs enable the management to group costs incurred in course of production as either fixed or variable.

Flexible Budgeting

The company groups its production costs as either as fixed or as variable costs. Fixed costs are costs that do not change with the change in output; the manufacturing company’s fixed costs projected do not change despite the change in units of production in the flexible budget. Variable costs changes with the change in production output level. Variable costs include; direct material, direct labor, and any other variable overheard that is incurred in the production (Klychova et al., 2014).

Stable production policy gives an organization an opportunity to prepare a flexible budget, carry out planning and performance evaluation and other types of budgeting. Planning and performance policy ensures that budgets are set ahead of the budget period based on the anticipated customers in the surrounding. Performance evaluation tends to compare if the budget is reflected in the actual performances (López & Hiebl, 2014). If the actual result conflicts with the budget, management will review their plans and check on the areas of weakness……

We can write this or a similar paper for you! Simply fill the order form!

Benefits of Budgeting Essay

Benefits of Budgeting
Benefits of Budgeting

Want help to write your Essay or Assignments? Click here

Benefits of Budgeting

A budget is prepared for control and planning purposes. Use of budgets allows for identification and setting of business goals and objectives. Forecasted values provide for profit analysis as well as performance evaluation and cash allocation. Master budget incorporates a set of operating, cash, program, and financial budgets for a specific accounting period (Collin 2011). A master budget incorporates all of the forecasted estimates in the financial and operating segments of the business.

At each production stage, a manufacturer creates a budget to assist in tracking of costs associated with the production of a product. Manufacturers use either a standard budget or an actual budget. A standard budget is prepared for the whole accounting period while an actual budget is prepared monthly (Dennis 2010). The budget allows a manufacturer to analyze costs and set prices for future as well as set prices for the products.

Benefits of Budgeting

Want help to write your Essay or Assignments? Click here

A manufacturer’s budget includes a set of three budgets that forecast cost of direct materials, direct labor, and overheads for the units to be produced during the production process. Through the budget, manufacturers can estimate the total cost used in production products listed in the production budget. Direct materials budget contains the cost of raw materials, direct labor budget consists of total labor hours used for the production of some units while overhead budget provides for the variable and fixed costs (Dennis 2010).

Budgeted income statement and balance sheet are the financial budgets included in the set of budgets to estimate profits. After preparation for budget used in production and cost estimation, a budgeted income statement shows the total profits to be realized from selling the finished products. The statement helps management to know whether the products will produce good returns. A pro forma is used to calculate financial results to emphasize current and estimated values (Tanner 2015).


Collin Barrow (2011). Practical financial management. Retrieved from

Dennis Ippolito (2010). Why budgets matter. Retrieved from

Tanner (2015). Financial budgeting. Retrieved from

Want help to write your Essay or Assignments? Click here

Budgeting for a Start-up Company

Budgeting for a Start-up Company
Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here

Budgeting for a Start-up Company

Budget to Implement for a Start-up Company

         Starting a company can be a daunting task if not well planned. Creating a budget is an essential task for a start-up company and it can help one understand where the business is going and if it is on the right track. The accountant helps in giving financial information that helps managers, tax authorities, investors and others in making decisions about resources allocation in the budget.

A budget should be realistic and accurate for a certain company depending on its goals (Banham, 2009).It helps explain how a company will utilize its resources to attain its goals. The main aim of this paper is to explain a budget to implement in a start-up company that will help it reach its financial forecast.

         Although budgeting is indeed more work, it pays off with many benefits. Some of these benefits include price setting, capital and credit procurement, flexibility, and forecasting. A master budget involves linked budgets of production costs, sales, purchase, and income. In the management of a company, it serves as the controlling and planning tool. It has two components, the financial and operational budget.

A business plan is a guide to owners, investors, and managers as a business starts and through its growth in different stages. Apart from a start-up plan, there exist several forms of business plans, which include internal, strategic, feasibility, operations business, and expansion plan (Livingstone, 2013).

Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here

         A manufacturing company is a company that converts raw materials to finished goods. The consumer buys the finished goods directly or another manufacturing business uses them for making a different product. For the purpose of this paper, a bakery will be the manufacturing company. Value chain is a series of activities that add value to a company. The bakery company value adding activities are of two types, these include primary and support activities. The activities in the primary type include,

  1. Inbound logistics, this will entail the receiving of raw materials.
  2. Operations, this is the manufacturing stage which involves conversion of wheat into baked items.
  3. Outbound logistics will help in the distribution of the baked goods to consumers.
  4. Marketing and sales, this will involve identifying customer’s needs and generating sales for the company.
  5.  Services, this activity will provide after sales support services for the consumer.

The secondary activities will be in four categories, which include human resource management, business infrastructure, technological development, and supply chain management. Business infrastructure activity will involve organization of structure, culture, and control systems. Human resource management will involve employee’s recruitment and training. Technological development activity will entail having information technology to support the value chain and the company. Supply chain management will entail purchasing materials, equipments, and suppliers for the company (Hornyak, 2008).

Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here

         An operating budget is the analysis of asserts, expected costs, and predicated income over a specific period. This type of budget will be appropriate for the bakery company. The budget must account for factors such as material coast, production, labor cost, sales, manufacturing costs, and administrative expenses. The budget is manageable on a weekly, monthly, or yearly basis.

The operating budget also provides a way for a company to estimate its immediate future expenses and revenues. Several reviewing steps are necessary in ensuring the company attains its goals, these steps include, review of business goals against performance, review of budget variance, and access issues associated with budget overages (Livingstone, 2013).

         The idea behind benchmarking is to make ensure that its services, products, and practices are the best against their competitors. Four benchmarking process will be utilized in the bakery company these includes,

  • Process benchmarking this demonstrates how top bakery companies accomplish specific task that earn them success. Interviews, site visits, and research are ways of obtaining information.
  • Performance metrics this involves use of qualitative measures as the reference for comparisons.
  • Strategic benchmarking this identifies winning strategies and lessons that have enabled top bakery companies to be successful.
  • Financial benchmarking involves a financial analysis of the bakery comparing it with top performers in order to assess the company’s competiveness.

Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here

Benchmarking has several benefits, which includes, clarity of specific areas of opportunities, set performances expectations, and enable monitor and manage company’s performers (Hornyak, 2008).

        Cost accounting involves collecting, analyzing, summarizing, and evaluating numerous alternatives to help managers take the most suitable course of action in the management of the company. The bakery will implement process costing as its type of costing systems. Process costing is a system that allocates direct and indirect cost for the manufacturing process. It assigns goods in large amounts.

The system is important since it will help the company keep track of the expenses in the production and distribution of goods. For example, the company may produce large number of bread but they may sell in small quantities, therefore it is necessary to allocate total product costs to units of product. One of the challenges that the company will face due to this system are costs errors.

Process costing does not allocate direct costs to individual goods leading to cost errors. This leads to increase in production cost thus increase in consumer product price. The company will implement the value chain analysis to overcome the problem that will help reduce the non-production cost thus creating the greatest possible value and price for consumers (Banham, 2009).

Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here

         For a start-up company to be successful it needs to draft a well-planned budget. This budget determines the success or failure of a company. By using this vital tool, one is able to track company’s expense, asserts and revenue required to keep the company growing. It may also help the company identify problems before they arise and be able to solve them. Therefore, a budget is like a roadmap for a company.


Banham, R. (2009). Better Budgets. Journal of Accountancy , 40-63.

Fearon, C. (2010). The Budgeting Nightmare. CMA Managment , 100-112.

Hornyak, S. (2008). Budgeting Made Easy. Management Accounting , 25-40.

Livingstone, J. L. (2013). The Portable MBA in Finance and Accounting. Accounting , 83-95.

Budgeting for a Start-up Company

Want help to write your Essay or Assignments? Click here