Performance report
Budget
Gross profit report
Continuous budgeting
Zero-based budgeting
Master budgeting
183,750
182,100
223,100
230,600
196,100
189,500
7,000
6,900
7,200
1,080,000 for A; 648,000 for B
1,125,000 for A; 675,000 for B
1,170,000 for A; 702,000 for B
Cash budget
Sales budget
Production budget
7,100
7,200
6,900
23,800
20,200
1,800
1,800
23,800
22,000
270,000
250,000
230,000
Improving overall decision making by considering all viewpoints, options, and cost reduction possibilities
Directing and coordinating operations during the period
Requiring all organizational units to establish their goals for the upcoming period
Start with a clean slate
Cannot be used by service companies
Do not show possible changes in underlying activity levels
Variable budget
Flexible budget
Activity budget
234,000 lbs of A; 39,000 lbs of B
225,000 lbs of A; 37,500 lbs of B
216,000 lbs of A; 36,000 lbs of B
1,080,000 for A; 648,000 for B
1,170,000 for A; 702,000 for B
1,125,000 for A; 675,000 for B
240,000
192,000
134,400
294,000
336,000
304,800
183,200
188,800
14,600
Machinery and other fixed assets wear out
Expansion may be necessary to meet increased demand
Amounts spent for office equipment may be immaterial
Cash payback method
Average rate of return
Net present value
Has time value
Is the language of business
Has an international rate of exchange
Internal rate of return and average rate of return
Average rate of return and cash payback method
Net present value and average rate of return
Cash payback method
Internal rate of return method
Average rate of return method
It emphasizes the amount of income earned over the life of the proposal
It is especially useful to managers whose primary concern is liquidity
Rankings of proposals are necesssary
9%
18%
15%
10,800
5,400
21,600
5 years
3 years
4 years
Average rate of return
Internal rate of return
Accounting rate of return
Internal rate of return
Net present value
Average rate of return
Past value methods
Straight-line methods
Methods that ignore present value
13,660
12,720
10,400
12.5%
40%
25%
Positive, $19,875
Negative, $19,875
Positive, $118,145
1.25
1.05
.95
2.4%
2%
14%
Manufacturing sunk cost
Manufacturing flexibility
Manufacturing control
Changes in price levels
The leasing alternative
Sunk cost
Depreciation deduction
Minimum tax provision
Interest deduction
Ignore the useful lives of six and nine years and find an average (7 1/2 years)
Adjust the life of proposal J to a time period that is equal to that of Proposal F by estimating a residual value at the end of year 6
Ignore the useful lives of six and nine years and compute the average rate of return