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RECAP OF MODULE I:
• Your career as an accountant
• What is Management?
MODULE II: • Basic Functions of Management
MASTER BUDGET • What is Accounting?
Christian Rey Mendoza, CTT, CB
• Accounting Dialects (Comparison)
• Thinking outside the box
• Cost as an overlap
• What is Management Accounting?

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RECAP OF MODULE I: ROADMAP:

• Role of Management Accountants
I. Recap
• Responsibilities
II. Introduction
• Organizational Chart
III.Business Planning
• Traditional Account to Finance Managers
IV.What is budgeting and a budget?
• Treasurer vs. Controller
V. Objectives and Benefits of budgeting
• Value Chain
VI.Master Budget
• Strategic Management
VII. Budget Flow
• Professional Ethics

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BUSINESS PLANNING BUSINESS PLANNING

Planning is the cornerstone of effective management Planning is the cornerstone of effective management

• Strategic Planning
• Focused on long-range goals of five to ten years. • Tactical Planning
• Top-level managers, generally with the assistance of key staff members • Determines how the strategic plans will be achieved
are involved. • Most tactical plans are short-term (1-18 months)
• Managers set organizational goals and objectives and agree on how to • Considered “single-use” plans and are developed to address a given set
achieve them. of circumstances or cover a specific timeframe.
• Goals = desired abstract achievements • A classic example of tactical planning is the annual budget.
• Ex.: To become market leader of X product
• Objectives = desired quantifiable results for a specified time
• Ex.: To manufacture 200,000 units of X product with fewer than 1
percent defects next year

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Planning is the cornerstone of effective management

WHAT IS BUDGETING?
Budgeting is the process of formalizing plans and translating qualitative
narratives into a documented, quantitative format. The end result of this
process is a budget.

WHAT IS A BUDGET?
Budget is the end result process of budgeting, which quantitatively expresses
an organization’s commitment to planned activities, resource acquisition, and
resource usage.

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OBJECTIVES OF BUDGETING:
Budgeting helps in planning, performance evaluation, coordination, control,
BENEFITS OF BUDGETING:
Budgetary control involves the use of of budgets to control the actual activities
motivation, and promoting positive behavior. of the firm.

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BUDGET FLOW:
WHAT IS A MASTER BUDGET? A well planned master budget can act as a:
- Guide to help managers align activities
A master budget represents a summary of all management’s plans and goals and resource allocations with
organizational goals
for the future, and outlines the way in which these plans are to be - Vehicle to promote employee
accomplished. A comprehensive financial planning tool. participation and cooperation.
- Performance evaluation
OPERATING FINANCIAL CAPITAL
BUDGET BUDGET BUDGET - Budget slack – intentional
underestimation of revenues and/or
• Sales Budget • Cash Budget overestimation of expenses.
• Production Budget • Budgeted Financial Statements - More common in participatory budget
• Purchases Budget • Balance Sheet than imposed budgets.
• Direct Labor Budget • Income Statement - Participatory budgets – developed
• Overhead Budget • Cash Flows through joint decision making of top
• Cost of Sales Budget • Retained Earning management and operating personnel.
• Operating Expenses Budget

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MODULE II:
MASTER BUDGET
Christian Rey Mendoza, CTT, CB

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