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Importance of Budget Management

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Assessment Part 1

  1. Explain the detailed description of budget and why it is useful to managers.

Budget and research money and money for years into the future and collected and re-evaluated on the basis of time. Financial means that the value is expected when the budget should mean that revenues are expected to cost the same.

The use of the process. This is a report in detail on the financial results, which are expected after some time. There are two words bottom of this. The first keyword "waiting". The expected means that something's going to happen. The keyword is the second "front", which is the time at the time of coming. Therefore, the Budget is to prepare the detailed financial results that may happen next. Based on the company's financial profile number, the same way point arithmetic. Financial plan and financial forecasting at the appointed time in the future. Budget season is over, money merchants of books and money to pay any invoice is paid

Most of the process of an effort to predict costs. If you take a few things on the budget front, then you're saying the money to foretell the future. It is important to the future success of the paper and out of money, and money. You can project your money before the age of 3 to 5 years. Clearly, these figures are forecasted and should be updated if your money is limited development.

Purpose for managers:

Planning

Managers can use budget for planning as how much fund, equipment, resources can be used in organization. If the real cost or expenses are higher than the estimated data managers can plan the budget next time accordingly. From budget managers can make perfect planning for running organization smoothly.

Control

The most important advantage for the preparation of the budget management helps management to have a budgetary control with the aim of monitoring and comparison of actual results. This further helps in the adaptation of the various actions in changing the business operations, as time goes by, or may change the budget if it becomes unavailable.

  1. The two different implications on managers about budgeting:
  1. Monitoring:

Monitoring of budget will help mangers for making more effective for organization. Financial system as per monitoring a system of work and work conditions. Business owners should establish a monitoring mechanism to ensure that the powder is responsible for the money that they have received. Environmental business today, signs of money was established to measure if organizations use their money for buying products and services. It is important that, when the regulator to create a budget, they know how much money the group is changing in such a way that gives patients and good works. The mechanism of authority, in this sense, it is just a measure or standard way to measure progress in achieving your financial goals. Each comes with the same goals money and create money, to help organizations achieve; however, there must be a way of monitoring.

  1. Prioritising:

Budget prioritising will helpful to managers as per the priority mangers will start the steps to take and plan well budget. Prioritising will help organization to take the first essential things to do this will help managers to use proper resources at proper place for perfect advancement.

Assessment Part 2

  1. Historical data and projected data of Warehouse Ltd & the purpose of the managers to validate.

Historical data about digital explain the work, what will happen in the industry already. Historical data is often archived and can be carried out in the non-volatile, storage. Historical data may be useful to try to predict the future of the industry and market, as well as carrying out analysis predictive.

Historical data to come to your company; It even records the data's great for development, such as Consumer Confidence Index, interest rates, building starts or variable economic you believe about your business based on your experience in business.

All projections will be broken and the moon perhaps a year. If you choose as many years, many want to be more than a residential one year and then annually for.

The projection that the longer the money is financial usage. Money can be summarized by the department or the main part of the rich; you can keep the line item detail of the budget. Money will be well, perhaps to add different out of money. If money is a great show and money as a percentage of sales, and the number and say this is part of a careful, too.

Managers in order to validate the data they confirm the day and keep your data and systems if there were others searching and processing, and to learn how to make good to get that kind of thinking to imagine. The integration of data from user "real" to see if there is. If so, what are filled with information available in the new data schema model work management system database did stick to the facts and Labour can start to create data stores.

  1. Describe the obstacles in data collection like missing, delated expectations.

In order to gather the data in many organizations there are number of errors occurs while collecting them like some data missed by employees to collect and report to managers. As they missed data the whole organization project gets mislead and their work get failed. The delayed information or data also delayed the work of managers to complete project. The whole organization and managers as well expect to be collected appropriate and complete data without and error to run the business smooth.

  1. How to calculate the budget is supported by asking flexible evidence.

Budget calculation should join the lawsuit or money order service operating budget should match the subject line, to ensure the effective compared with budget work of historical and projected budget. The mismatch between budget items and accounting creates some of the responsibilities of the staff leadership or staff component which should translate between the two accidents and evidence to undermine the value of financial reports. Especially money, when accounting / financial statement line items without corresponding budget line items, it can cause budget overages or fault reporting line item measure.

Create a top line of financial statement, how money interpretation of the real line shows the model, using common financial services research industry, and organization of data collection and Cultural Data Project. Although not have to tell you how to build a budget easily solve cross legs resources required to run these requirements and offers accurate and staff time well.

  1. Calculation of sales, purchases, inventory, cash flow, COGS income statement and balance sheet as per the Appendix.

Sales budget for warehouse ltd 2012

Desire Net profit = $13,725

Sales = $137,250

Purchase budget for warehouse ltd 2012

Desire Ending inventory = $15,750

Require for sales = $98,036

Opening inventory = $15,000

Purchase required = $98,786

Inventory budget for warehouse ltd 2012

Opening inventory = $15,000

Ending inventory = $15,750

Cost of goods sold for warehouse ltd 2012

Opening inventory = $15,000

Purchases = $ 98,786

Ending inventory = $15,750

COGS = $ 98,036

Operating expenses budget of warehouse ltd 2012

Marketing expenses = $ 6,862.5

Admin expenses = $14,510.07

Finance expenses = $ 4,117.5

Total $ 25,490.1

Cash flow budget of warehouse ltd 2012      

Cash 31july 2011 = $ 35,000

Revenue = $ 1, 37,250

Cash payments = $1, 37,275

Cash at 30 June 2012 = $ 34,975

Income statement for budgeted ending year of 30 June 2012

Revenue

137,250

COGS

98,036

Gross profit

39,214

Operating expenses

25,490

Net profit

13,724

Balance sheet of 30 June 2012 as per the budgeted

Current assets

50,725

Non-current assets

73500

124,225

Current liabilities

12,000

Non-current liabilities

7,000

19,000

Net assets

105,225

Equity

105,225

Assessment Part 3

  1. Cash budget:

Cash Budget for Countdown Limited December 2012

Actual

Budget

Variance

$

Cash Balance

5,000.00

5,000.00

0.00

Cash Receipts:

Cash

24,000

22,000

2,000

Collection of amount receivable

13,500.00

15,000.00

1500

Other Income

29,000.00

32000.00

3000

Total cash

71,500.00

74000.00

2500

Expected Cash Payments

Raw material

18,000.00

15,000.00

3000

Payroll

7,200.00

9,400.00

2200

Other direct expenses

500.00

1,500.00

1000

Advertising

500.00

1,000.00

500

Selling Expenses

1,500.00

1,400.00

100

Administrative expenses

1,500.00

500.00

1000

Plant and Equipment Exp.

5,000.00

7,500.00

2500

Other payments

1,700

2,000

300

Total cash expenses

35,900.00

38,300.00

2400

Ending cash balance

35,600.00

35,700.00

100

Actual

Budgeted

Variance $

Variance %

Income

Sales :-

Retail Sales

5,318.00

5,000.00

318

6.36

Wholesale Sales

1,567.50

1,500.00

67.5

4.5

Consignment Sales

2,000.00

2,500.00

500

20

Total Income

8885.50

9,000.00

114.5

1.27

Cost of Sales

Retail cost of sales

3,419.31

3,000.00

419.31

13.98

Wholesale cost of sales

1,001.33

1,000.00

1.33

0.13

Total cost of sales

4,420.64

4,000.00

420.64

10.52

Gross Profit

4,464.86

5,000.00

535.14

10.70

Expenses

Car & Truck

100.00

125.00

25

20

Freight Paid

48.95

75.00

26.05

34.73

Insurance

45.00

50.00

5

10

Interest

750.00

750.00

0

0

Legal & prof. services

178.90

250.00

71.1

28.44

Actual

Budgeted

Variance $

Variance %

Lease Machinery & Equipment

100.00

120.00

20

16.66

Supplies

150.00

150.00

0

0

Taxes

50.00

75.00

25

33.33

Meals & Entertainment

1,000.00

1,500.00

500

33.33

Utilities

450.00

400.00

50

12.5

Wages paid

750.00

700.00

50

7.14

Total Expenses

3,622.85

4,195.00

572.15

13.63

Operating profit

842.01

805.00

37.01

4.59

Net Profit / Loss

842.01

805.00

37.01

4.59

  1. Two Variance From Cash Budget For Countdown Limited
  1. Promotional costs:

The promotion cost means advertising expenses in Cash Budget For Countdown Limited is projected to 500 where the actual expense is about 1500 which was 1000 more spent than projected.The warehouse can lemmatize the expenses for promotion or they can extend their budget.

  1. Plant and equipment costs:

Companies tax cost of reducing the company's seed and tools to reduce factories and equipment shut down, 2500 to the industry forefront at the actual 5000, leaving little but the seed 7,500 budget and the economy, price differences between crops is calculated. In this case also the Warehouse can manage their expense for plant and equipment purposes as their budget for this exceed about 2500.

Two Variance From Profit & loss Statement For Countdown Limited

  1. Taxes:

The countdown word limited tax money and $ 50, but their tax money as -for- budget and $ 75 corporate tax Actual tax charge of 50% or more, and thus the actual number of companies reducing taxes, reducing the company. The loss after tax in the form of advertising revenue. Here, countdown has profit of 25 as the tax is about 50 and budgeted 25 more. They can use the profit to manage the other exceed expenses.

  1. Dining and entertainment:

The modification of food and $ 500 amplifier, entertainment, Daniel, for the amount of food and an amplifier; Entertainment for $ 1000 and $ 1500 budget to reduce the staff to eat Countdown Entertainment little recognition of cheap food, etc. Features: companies can save money on food. Moreover, employees were able to calculate costs and limited love, and movies can make money. In this case also having profit so that countdown can use the profited money in loss budget.

References

"Budget Choice: Planning Versus Control". Harvard Business Review. N.P., 2017. Web. 8 Mar. 2017.

"IBM Knowledge Centre". Ibm.com. N.P., 2017. Web. 8 Mar. 2017.

Power, Dan. "Data Warehousing 101 by Dan Power - Beyenetwork". B-eye-network.com. N.P., 2017. Web. 8 Mar. 2017.

Rahm, Erhard. "Data Cleaning: Problems and Current Approaches". www.betterevaluation.org. N.P., 2017. Web. 8 Mar. 2017.

"Why Is It Important For A Business To Budget?" Smallbusiness.chron.com. N.P., 2017. Web. 8 Mar. 2017.


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