Budgeting

Budgeting

Introduction

Budgeting is a key component in management short and long term planning. A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. It means budget is very particular plan for a company so that a company can actually know about the financial problem. In business, budgets help you determine how much money you have and how you will use it, and help you decide whether you have enough money to achieve your financial goals. As part of a business plan, a budget can help convince a loan officer that you know your business and have anticipated its needs.

Answer # 1

The basic functions of budgeting are:

The current analysis

Budgeting provides accurate and timely management analysis tool. It is a set of documents providing instant productivity and comparative analysis of the objectives.

Predicting productivity

Budgeting can predict productivity indicators accumulating all partial estimates (It can take into account the use of other forecasting methods, such as trend analysis, mathematical extrapolation "renewal" of previous trends, operations research, etc.), While maintaining the continuity of forecasts, readability and understanding of employees.

Allocation of funds

Budgeting is a great tool for the proper allocation of all resources of the company, giving a choice of options, "what - if" impact assessment of selected allocation for the company as a whole and provides an early warning system for emerging opportunities and threats .

Control of productivity

Budgeting allows a company to control the current productivity rates and an early warning system to provide information on the time, size and, indirectly, of the reasons for deviations from the forecasts updated forecasts contained in the initial budget, and through appropriate changes in the allocation of resources allows the company to maximize the results.

Instructional leadership function

Budgeting allows the company to learn from the mistakes. It is the tool that makes the leader committed in the construction of the previous forecasts, identifies errors in judgment and provides the practical knowledge and tools to help avoid similar mistakes in the future.

Developing consensus and support

Through the budgeting process worked out a consensus on the ideas, strategies and developments, and agreed the budget is accepted by management at the executive level (regions, departments, divisions, branches, etc.).

Answer # 2

The answer is obvious that the divisions that successfully utilize their budget are successful in achieving their targets because if the manager successfully utilizes the budget it means that he has full information about the business scenario, his forecasting is perfect. He knows every aspect of the business very well and utilizes the optimal resources that have been assigned to him to achieve the maximum profit. Meeting the budget target is essential for successful managers. The organization success depends upon the performance of individual divisions. If the division performs well in the assigned resources it will contribute in the success or the profitability of the organization.

Answer # 3

In my opinion, Barry does not contain proper information about all the prevailing circumstances. He is not able to predict the sales ...