ipl-logo

Why Businesses Need To Plan For The Future

938 Words4 Pages

oes not necessarily result in useful information..
Budgeting
Businesses need to plan for the future and one of the ways of planning for the future is to prepare a budget so that actual information and results can be compared with the expected information in the budget.
‘A budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues; resource quantities, costs and expenses; assets, liabilities and cash flows’ (The Chartered Institute of Management Accountants, 2005)
A budget is a quantified plan of action for a future period. It can be imposed or participatory.
When setting up a budget, companies usually consider the following among others:
• Long term plan
• Limiting factor
• Budget manual
• Sales budget
• Production capacity
• Discretionary costs
• Consolidation and coordination
Examples of budgetary systems
• Incremental budgeting: This is concerned mainly with the increments in costs and revenue which will occur in the coming period.
• Fixed budget: A budget which is designed to remain unchanged regardless of the volume of output or sales achieved.
• Flexible budget: A budget which, by recognizing different cost behavior patterns, is designed to change budget volumes as volume of output changes.
• Zero based budgeting: Rejects the assumption, inherent in incremental budgeting. Involves preparing a budget for each cost center from a zero base. Every item of expenditure then has to be justified in its

Show More
Related

  • P1 Unit 4 Paper

    1770 Words  | 8 Pages

    The overall budget combines elements such as revenue, operating expenses, assets, and income streams to allow companies to set goals and evaluate their general effectiveness. A departmental budget helps to predict the income and expense of a particular department to achieve its financial goals. A departmental budget allows the company to analyze the costs and expenses associated with a particular department and whether the company's income is sufficient to meet these costs. Moreover, it allows management

    Read More

  • Pawnee Medical Center Case Study

    611 Words  | 3 Pages

    An important factor he should focus on is the budget. In order for any organization to be successful, one must have a budget. The purpose of budgeting includes a forecast of income and expenditure, a tool for decision-making, and a means to monitor business performances. Budgeting is a critically important part of the business planning process. Business owners and managers need to be able to predict whether a business will

    Read More

  • Business Planning Activities Case Study

    1112 Words  | 5 Pages

    Business Planning Activity – Notes Only Document (Please answer each question thoroughly and retain a copy of this information for your records) 1. Describe your vision for building your practice at Edward Jones. How do you plan to add value to the clients and communities you will serve? My vision for building my practice at Edward Jones is to provide the best financial service and knowledge to those in my community.

    Read More

  • Strategic Plan Part 3 Strategic Evaluation Paper

    1161 Words  | 5 Pages

    Strategic Plan, Part 3: Strategic Evaluation Introduction Owens Corning develops and produces insulation, fiberglass composites, and roofing in the global market. The company has five potential business strategies that it can use to plan their function in the business operations. The strategies enable the company to cooperate the different department. Monitoring the product strategies is to review the business level strategy to implement in their action (Bui, & de Villiers, 2017). The review involves the economic acquisition resources, equipment used to produce goods and services, business facilities and other administrative costs.

    Read More

  • Budgeting And Evaluating The Performance Of British Airways

    827 Words  | 4 Pages

    A budget is when a business or individual have a certain amount of money to spend. Relating this to B.A, this organisation has a budget as it is a process of preparing financial reports which are expected in the present and future. Budgeting sets a guideline for how much money this business can spend on their physical resources

    Read More

  • Coast Guard Spending Plans Case Study

    1617 Words  | 7 Pages

    1. The Coast Guard needs to standardize and enforce spend plans and eliminate current spend down practices. During the course of any given fiscal year, usually during the fourth quarter, units throughout the Coast Guard tend to go on a buying frenzy colloquially known as spend down. 2. Spend down is an inefficient, wasteful, and very costly manner of managing limited Coast Guard resources.

    Read More

  • California Budget Process

    697 Words  | 3 Pages

    Within the department, the budget process involves the planning and analyzing formation. The department searches and examines the issues occurring and inputs them into the budget. The DDS has included issues of local assistance to regional centers at the department level. The central budget office prepares its initial recommendations to the department level, and later modifies the budget based on the department head’s decision. Central budget office determines and creates estimations based on revenues.

    Read More

  • Budget Variance Analysis Paper

    1288 Words  | 6 Pages

    Budgets are part of the strategic management plan in any organization. Prices and volumes of goods sold are indicated in the budget too. Thus they play a significant role in determining the performance of a company according to the budget (Jamal, Suript0, & Syahputra, 2016). Therefore, expected sales are determined in advance through the use of budget. Products and services are hence planned for earlier on their pricing.

    Read More

  • Home Depot Financial Analysis

    365 Words  | 2 Pages

    P., Tsay, B., & Olds, P. R. (2011). Fundamental managerial accounting concepts (6th ed.). New York, NY: McGraw-Hill Irwin. WILLSON, T. (2014). Finding Budget Flexibility - or Not: The Impact of Fixed and Variable Cost.

    Read More

  • Explain The Strategic Planning Process

    1083 Words  | 5 Pages

    • Explain the strategic planning process As we learned from the textbook, there are elven classic steps for the strategic planning process. In this paper, I will explain each of them and discuss the inputs and outputs of each stage. 1. Preparation In preparation stage, the goal is to have a clear understanding about the organization policies, cultures, advantages, disadvantages, its competitors and market analysis.

    Read More

  • Importance And Importance Of Resource Planning

    1098 Words  | 5 Pages

    The Importance of Resource planning: The organization is where resources come together. Organizations use different resources to accomplish goals. The major resources used by organizations are often described as follow: (1) Human resources, (2) Financial resources, (3) Physical resources, and (4) Information resources. Managers are responsible for acquiring and managing the resources to accomplish goals.

    Read More

  • Harley Davidson Case Study Solution

    813 Words  | 4 Pages

    Solution : Introduction: A budget is an estimation of particular commodity, quantity etc. It can be prepared for any number of days but generally it is prepared wither for a year or quarter... A budget may or may not become the actual outcome.

    Read More

  • Jacksonville Police Department: A Case Study

    993 Words  | 4 Pages

    Interestingly enough, customary budgeting takes the previous year's financial budget as a layout and afterward manufactures off of it. Zero-based budgeting powers administrators to consider how every dollar is spent, each year (Investopedia, n.d). This procedure additionally constrains them to legitimize every working expense and consider which regions of the organization are creating incomes. One of the real inadequacies of zero-based budgeting is that it can remunerate transient speculation by moving assets towards regions of the organization that will create incomes throughout the following calendar year (Investopedia, n.d). A few regions of the organization are long haul ventures, for example, innovative work or training.

    Read More

  • Strategic Prediction Research Paper

    532 Words  | 3 Pages

    How will we be able to determine the future threats of terrorist attacks? As law enforcement professionals, we should not hibernate on the sidelines and wait for a terrorist event to unfold. We own the burden of acting to prevent and prepare for such attacks with the highest negative consequences for our organizations and people that we serve. Therefore, regardless of how difficult it may appear to be, we are compelled to explore the possibilities and implications of future events and their possible origination points or areas of the world. The future is an ‘unknown factor’, one that lies beyond our present knowledge.

    Read More

  • Master Budget Analysis

    3334 Words  | 14 Pages

    Introduction to Budgets and Preparing the Master Budget Budgets and the Organization Many people associate the word budget primarily with limitations on spending. For example, management often gives each unit in an organization a spending budget and then expects them to slay within the limits prescribed by the budget. However, budgeting can play a much more important role than simply limiting spending. Budgeting moves planning to the forefront of the manager's mind. Well-managed organizations make budgeting an integral part of the formulation and execution of their strategy.

    Read More

More about Why Businesses Need To Plan For The Future

Open Document