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To begin class: Have students do ESTIMATION TASK (allow about minutes)

The Firm SBU [make adjustments] Division [make adjustments] [see the sum of estimates and adjustments] Group Account [make estimates] Someone making estimates, like the students just did... Someone making a decision, based on the sum of many estimates …

A plan for the future, expressed in numbers (both financial and nonfinancial) Planning = developing objectives, linking objectives to resources & Control = making sure objectives are obtained ACCURATE IS GOOD Motivation = to encourage managers to exert effort EASY IS GOOD These two purposes are mutually exclusive, but firms typically have only one budget % of budgets are met/exceeded, so EASY is beating ACCURATE Personally, I feel that U.S. companies spend too much time budgeting, and we in the U.S. spend more time than companies in other countries BUT, budgeting certainly has some benefits (and you will certainly be doing it…)

Sales forecast Operating budgets = DM, DL, MOH, S&A Capital expenditure budgets Pro-forma financial statements [pro-forma = “as if”] has all the budgets in it

IN CLASS: –Womack Company –Paradise Company –Whiskers Products, Inc. –Kaitlyn Korporation –Archer Company –Ward Company EXTRA: –N/A Cost Page 9