Harley Davidson Case Study Solution

813 Words4 Pages
Solution :

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.
A sales budget can be defined as a projection of how much a particular business or organization will be able to sell its product within a Year. It is always an anticipated.
Budgets serve as a framework and help managers to estimate likely incomes and expenditures for specific periods so that they may determine the most effective and efficient strategies for profitability and asset expansion.

Sales are the most dominating factor for any organization. In any circumstances, sales will always
…show more content…
Therefore, their anticipated budget will be $120000 million dollars. This in turn will affects the raw materials budget because they need to buy components which is sufficient to manufacture 3 million bikes and obviously a little more to be in safer position. Based on their sales budget, they would be allocating resources and making sure that there is no wastage of resources. In the same way, Sales budget will affect the other budget too. If the level of sales is high, Raw material Requirement will also be high which in turn will require more labor to process and manufacture this product. Direct labor which is a human resource will be recalculated on the basis of sales of 3 million bikes. It may happen to produce 1 million products, they require 50000 employees but to produce 3 million products they require 200000 employees and to be on safer size, 10% extra labor will be recruited which will give a total of 220000 employees. Therefore it is clearly understood that the company can prepare their Labor Requirement budget directly from the sales budget. The same concept will apply to overhead and capital expenditures because overheads are directly proportional to the production and if the sales are high, product will automatically are high. Similarly quantity requirement will lead to the requirement of machines. To produce 2 million bikes , 3000 machines were…show more content…
It also follows the same concept of analyzing and preparing the sales budget first because there CEO feels that it is the basis for doing any other things. He stated that all the other budgets are related to the sales budget. When we prepare a project report for obtaining Finance from the bank, the bankers analyzed the projected sales because it will determine the profitability. This company also follows the concept of preparing the sales budget and based on that other budgets are

More about Harley Davidson Case Study Solution

Open Document