Capital Budgetting Process Essay

3011 words - 13 pages

Part A: BUDGETING PROCESS
1. Definition [1]
* A budget is the financial blueprint or action plan for an organization. It translates strategic plans into measurable expenditures and anticipated returns over a certain period of time
* Budgeting is the process of creating and preparing an organization for the future.
2. Objectives[2]
* The budget provides a yardstick for future results can be compared;
* It allows management to plan and forecast in the areas of capital adequacy in work and or other types of scarce resources available;
* Budget may direct cost of capital towards the most beneficial;
* Budget support planning and control income and expenditure for ...view middle of the document...

* Cost of goods sold budget: data of the direct material purchases budget, direct labor cost budget, and factory overhead cost budget are combined with the desired ending inventory and the estimated beginning inventory data to determine the budgeted cost of goods sold.
* Selling and administrative expenses budget: records expenses of selling and administration that occurs in the operation activities of business.
* Budgeted income statement: summarizes the estimates of all phases of operations. This allows management to assess the effects of the individual budgets on profits for the year.
4.2 Balance sheet budgets:
* Cash budget: present the expected receipt (inflows) and payments (outflows) of cash for a period of time.
* Capital expenditure budget: summarizes plan for acquiring fixed assets. It is considered in preparing the operating budgets.
* Budgeted balance sheet: estimates the financial condition at the end of the budget period. It assumes that all operating budgets and financing plan are met. It is similar to balance sheet based on actual data in the accounts.

Part B: CAPITAL BUDGETING PROCESS
I. Overview[4],[5],[6]
1. Definition
Capital budget is the plan that a company or an organization makes for buying buildings, machinery, equipment, etc. over a period of time.
Capital budgeting is defined “as the firm’s formal process for the acquisition and investment of capital. It involves firm’s decisions to invest its current funds for addition, disposition, modification and replacement of fixed assets”. Capital budgeting is concerned with sizable investments in long-term assets. These assets may be tangible items such as property, plant, equipment or intangible ones such as new technology, patents or trademarks. The capital budget also includes any expenditure for tangible property which is worth $1,000 or more and a useful life of three years or more; or any expenditure of $5,000 or more for the maintaining or enhancing fixed assets.
Different projects such as Marketing and Advertising, Research & Development (R&D); Choices among different production processes; Expanding into new products, industries, or markets; Investments in new technology; Acquisitions; Strategic investment decision are evaluated through capital budgeting process.
2. Objectives
* To identify assess and plan for the capital needs of the institution for a five-year period.
* To provide a basis for determining alternative sources of funding for capital needs including choices for donors.
* To provide a basis for the appraisal of the impact of new capital expenditures on the operating budget.
* To provide an accounting system for the capital resources of the institution.
II. Classification of investment projects[7]
Investment project can be classified 5 categories on the basic of how they influence the investment decision process.
1. Independence projects
Independence...

Other Papers Like Capital Budgetting Process

A Heart Of Darkness Essay

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

The Aspects Of Vulnerability Among The Exploited In Medical Research

2287 words - 10 pages Essentially, everyone is in some state of vulnerability. However, some of us are more susceptible to harm due to our vulnerabilities. The susceptible are the individuals with the greatest risk. These individuals risk the loss of their autonomy, and maybe even their lives. Vulnerable populations can be found in every subset of society. However, as previously mentioned, there are some vulnerable populations that are at an even greater risk than

The Hitchhiker’S Guide To The Galaxy

1171 words - 5 pages The Hitchhiker’s Guide to the Galaxy As the human race makes life-changing discoveries, it is made apparent that there is always more to learn as the universe, instead of becoming familiar, is becoming absurd. The Hitchhiker’s Guide to the Galaxy, written by Douglas Adams, as well as the 2005 film adaption, portrays absurdity to be an all-encompassing system in the universe. Through the introduction and attempt to understand lack of reason, the

The Ford Motor Company Wage Increase Of 1914 And The Theory Of Incentives And Efficiency Wages

1252 words - 6 pages ‘It’s not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages’ (Henry Ford, cited in Johnson and Weinstein 2004, p. 2). When the Ford Motor Company announced that it would more than double the wages of its workers in January 1914 to a ‘five-dollar day’ minimum, was this a contradiction to Henry Ford’s statement? If customers are actually the ultimate payers of wages, then more than

Historical Analysis Of The Economical Breakthroughs Of The Industrial Revolution

1396 words - 6 pages A Historical Analysis of the Economical Breakthroughs of the Industrial Revolution During the Industrial Revolution, many elements of society experienced huge breakthroughs that would change the way they functioned forever. Economics were definitely one of them. With many new inventions and many factories appearing, many, many, more resources were being created than ever before. Also, all of the revenue from these resources was being given to

Leadership Portrayed in Monologue from Shakespeare’s Henry V

1214 words - 5 pages Leadership is defined as a socially constructed process and which also affect organizational future outcomes. Leader is someone at high position who have overall duty for an organization, she or he decide what to do and the way how to achieve it. (Carter and Greer, 2013)The role of leader is extremely important for an organization, leader use their own power to influence the followers though many different ways such as motivation in order to

Cuba Civil Rights

1906 words - 8 pages Picture a country that has limits on how much you can make random government imprisonments and more what do you do. That is the situation for the eleven million seventy-five thousand two hundred forty-four people of Cuba since the takeover of Fidel Castro. The US is opposed to Castro taking control of Cuba. Castro managed to ease the United States nerves when he said that Cuba was against all forms of communism. According to Lana Wylie the Union

US Freight System

1273 words - 6 pages for new entrants, or close the door for NITL to continue in the market. The League lacks of product differentiation, or it is not clear for its current and potential future members. This has brought new entrants to the market. These new entrants focus their strategy in a specific transportation segment, like the American Transportation Association (ATA), that has been the leading advocate for the trucking industry. Capital requirements is a

Democratic Peace Theory

1852 words - 8 pages Intro: US Presidents have made it a goal during their term(s) in office to establish a good relationship with foreign countries and even try to improve upon existing connections with our allies. Some believe it is to prevent conflicts between the countries while others dispute that it is a threat assessment by the United States to pick and choose their friends and enemies. Preventing conflict between two democracies or countries that practice

Booker T. Washington

1621 words - 7 pages “Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome” –Booker T. Washing. Booker Taliaferro Washington was born in Hale’s Ford, Virginia on April 5th, 1856 to Jane Burroughs and an unknown White man. Washington was married three times. His first wife was Fannie N. Smith from Malden, West Virginia. Booker and Fannie were married in the summer of 1882 and had one child

Corn, Broccoli, Grass Or Balanced

2611 words - 11 pages humans became the primal species that we are, and is the solution that would redeem humans into a health state, that we once had. Every species should have the right to act accordingly to their kind’s idiosyncrasy. In today’s food system, animals get the short end of the stick. Animals are treated as machines and capital in CAFOs and feedlots (Pollan 317). They are no longer regarded as life organisms, and it is representative in the

Related Essays

Freedom And Responsibility Essay

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were

Hate Crime Laws Essay

2348 words - 10 pages On June 7, 1998, 49-year-old James Byrd Jr. of Texas accepted a ride from three white men, who then beat him severely, urinated on him, chained him by his ankles to the back of their pick-up truck, dragged him for three miles into the countryside, and dumped his corpse in front of an African-American cemetery (Graczyk). A little over a year later, a jury sentenced ring leader John King to death by lethal injection (“Man Executed for Dragging

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages health (Murdock, 2009). REBT recognizes the interaction of emotions, beliefs, and behaviors through the ABC model and the therapist will work to help Sarah understand the interrelatedness of these aspects (Murdock, 2009). It is important that the therapist help Sarah understand the process and philosophy of REBT, as the majority of patient doubts have been “traced to misperceptions about REBT” (Dryden, Hurton, Malki, Manias & Williams, 2007, p. 86

Holidays In Albania Essay

1636 words - 7 pages (“Pogradec City Guide - Drilon & Tushemisht’). You might want to learn more about the culture of Albania, which is well-known for its ancient traditions, as one of the earliest places in Europe. The advantage of spending cultural holidays in Albania is that there are old castles, churches, and houses to visit in almost every city. You should definitely start your cultural vacations by viewing Tirana, the Albanian capital city since 1920. It is