Creating a Master Budget
This case is intended to help students in a graduate cost or managerial accounting course gain an in-depth knowledge of budgeting by developing and using a multi-product, multi-period master budget. The case consists of two segments that can be used in conjunction or separately. The first segment allows students to create a master budget. The second segment allows students to use their budgets to make recommendations for improving company performance. Only a portion of the first segment will be required in this course. The use of multiple products and introduction of incentives to improve company performance add a degree of complexity above that found in most budgeting problems. Working on this type of case provides you with a greater understanding of both the flexibility of a master budget and of the information such a budget can provide to decision-makers. In addition, the case illustrates the incentives for budget padding, providing an opportunity to conduct a discussion of ethical budgeting and potential consequences in a rich context.
This assignment is to be submitted using an Excel XLS or XLSX workbook. Each budget schedule is to be contained on a separate spreadsheet tab. You are to utilize the power of Excel for totaling and referencing amounts contained in other spreadsheets. Create a “Basic” spreadsheet for your assumptions and raw data which will be used in the other budget spreadsheets. Use Excel referencing to look at these raw data figures.
Examples of portions of this assignment are included in Chapter 9 of the textbook. You should review that chapter and complete the homework prior to beginning work on this case. Further, complete the Excel Review assignment included in Week One.
Only the following budget spreadsheets are to be included: Sales, Collections, and Production. Be sure to use Word Wrapping, Alignment, and Punctuation for readability.
Your grade is based upon the accuracy and formatting of each spreadsheet, 30 points each. The use of the power of Excel is critical to a master budget such as this and, therefore, 20 points will be awarded for the creation of an Assumptions spreadsheet and references to those assumptions by the other spreadsheets.
