Page 67 - Budgeting for Managers

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Budgeting for Managers
should be able to build the full spreadsheet from this example.
When building spreadsheets like this one, it’s important to
understand them clearly and to make any adjustments you
need. For example, in Table 3-3, the monthly column works for
11 months of the year, but you would need a special spread-
sheet for the month when the annual downtime occurs.
Hour 1 Shft 1 Day 1 Week 1 Month 1 Year 1
100 Year1/(365*3) Year1*365 Year 1/52 Year1/12 Hour*265*3*8
Hour 2 Shft 2 Day 2 Week 2 Month 2 Year 2
Year2/(358*3*8) Year 2/(365*3) Year2/358 Year2/51 Year2/12 =Year1
Table 3-4. Converter for estimation periods with hours and shifts
(formulas)

Working with Account Categories and Line
Item Names
The production figures from past years or months will probably
be in the standard income and expense format we introduced in
Chapters 1 and 2, with line items and amounts. If they are not,
you should set up a spreadsheet and enter them. However, you
should not assume that last year’s categories are right for this
year. You may find that certain line items are not needed any
more and you may find that you need some new line items.
Also, you might decide that you want to split items or combine
items. Set up the line items for this year’s budget in the way
that makes sense for this year.

Evaluating the Quality of Your Information
We want to base our new estimates on good past information.
How do we know that the information we have is accurate?
If past records come from the accounting department, we
can trust that they are probably as good as we’ll get. If you can
speak to the accountant or bookkeeper who worked on the
files last year, he or she can tell you if there were any adjusting