Budgeting Basics and Beyond

JAE K. SHIM, PHD, has authored or coauthored more than fifty professional and college finance and accounting books. Thirty of his publications have been translated into various languages such as Chinese, Spanish, Russian, Polish, Croatian, Italian, Japanese, and Korean. He is CEO of Delta Consulting Co., a consulting and training firm, and accounting and finance professor at California State University, Long Beach. JOEL G. SIEGEL, PHD, CPA, is the author of over fifty books and has written hundreds of articles for accounting and financial journals. He was a member of the audit staff at Coopers & Lybrand. Dr. Siegel has acted as consultant in accounting issues to many organizations, including IT&T, Citicorp, and Person/Wolinsky CPA Review. ALLISON I. SHIM, MS, is CFO of Delta Consulting Co. She is a finance expert and a PhD candidate at the University of California at Irvine.

• About the Authors xiPreface xiiiChapter 1: The What and Why of Budgeting: An Introduction 1Chapter 2: Strategic Planning and Budgeting: Process, Preparation, and Control 29Chapter 3: Administering the Budget: Reports, Analyses, and Evaluations 45Chapter 4: Break-Even and Contribution Margin Analysis: Profit, Cost, and Volume Changes 57Chapter 5: Profit Planning: Targeting and Reaching Achievable Goals 79Chapter 6: Master Budget: Genesis of Financial Forecasting and Profit Planning 95Chapter 7: Cost Behavior: Emphasis on Flexible Budgets 119Chapter 8: Evaluating Performance: The Use of Variance Analysis 131Chapter 9: Manufacturing Costs: Sales Forecasts and Realistic Budgets 191Chapter 10: Marketing: Budgeting for Sales, Advertising, and Distribution 203Chapter 11: Research and Development: Budgets for a Long-Term Plan 223Chapter 12: General and Administrative Costs: Budgets for Maximum Productivity 237Chapter 13: Capital Expenditures: Assets to Be Bought, Sold, and Discarded 243Chapter 14: Forecasting and Planning: Reducing Risk in Decision Making 267Chapter 15: Moving Averages and Smoothing Techniques: Quantitative Forecasting 277Chapter 16: Regression Analysis: Popular Sales Forecast System 289Chapter 17: Cash Budgeting and Forecasting Cash Flow: Two Pragmatic Methods 301Chapter 18: Financial Modeling: Tools for Budgeting and Profit Planning 315Chapter 19: Using Software Packages and E-Budgeting: Computer-Based Models, Spreadsheets, and Web-Based Systems 329Chapter 20: Capital Budgeting: Selecting the Optimum Long-Term Investment and Real Options 351Chapter 21: Budgeting for Cost Management: Activity-Based Budgeting and Life-Cycle Budgeting 393Chapter 22: Zero-Base Budgeting: Priority Budgeting for Best Resource Allocation 411Chapter 23: Managers’ Performance and Balanced Scorecard: Evaluation at the Division Level 419Chapter 24: Budgeting for Service Organizations: Special Features 453Chapter 25: Budgeting for Nonprofit Organizations: Diverse Types 463Chapter 26: Using Management Games for Executive Training 487Appendix I: Future and Present Value Tables 505Appendix II: Statistical Table 511Glossary of Budgeting and Planning Terms 513Index 531

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