What should a budget focus on, for a restaurant chain whose objectives are:
Opening one new outlets each six month
Building up the restaurant brand
Write your answer in 2 -3 lines for each.
a. Sales must be in focus
Your company budget should be a living strategy that informs business
decisions.
b. The budget must focus on the cost control keep profit margin high
Explain the importance of analysis and presentation of budget options and recommendations in clear format. Answer in 50 – 100 words.
A standardised budget is vital as it: Ensures that is specific time period for
budget. ... Therefore is very important to agree the format, because you can
easy understood a budgets and is easier manage real financial performance
and planning income and expenditure.
Explain any three (3) ways to circulate and communicate a draft budget to colleagues and managers for input. Write your answer in 100 – 150 words.
1- Budget follow-up and data feedback are part of the control aspect of
Budget control.
2- Since the budgets are dealing with projections and estimates for
future operating results and financial positions, managers must
check their budgets continuously and correct them if necessary.
3- Often management uses performance reports as a follow-up tool to
compare actual results with budgeted results.
How can you negotiate with colleagues on budget requirements and incorporate any agreed modifications, according to organisational policy and procedures? Write your answer in 100-150 words.
The term budget has negative connotations for many employees. Often in
the past, management has imposed a budget from the top without
considering the opinions and feelings of the personnel affected. Such a
dictatorial process may result in resistance to the budget. A number of
reasons may underlie such resistance, including lack of understanding of the
process, concern for status, and an expectation of increased pressure to
perform. Employees may believe that the performance evaluation method is
unfair or that the goals are unrealistic and unattainable. They may lack
confidence in the way accounting figures are generated or may prefer a less
formal communication and evaluation system. Often these fears are
completely unfounded, but if employees believe these problems exist, it is
difficult to accomplish the objectives of budgeting.
Explain in brief, an approach to complete a final budget, in a clear format and within designated timelines? Write your answer in 100-150 words.
1. Assess your financial resources. The first step is to calculate how much
money you have coming in each month. ...
2. Determine your expenses. Next you need to determine how you spend
your money by reviewing your financial records. ...
3. Set goals. ...
4. Create a plan. ...
5. Pay yourself first. ...
6. Track your progress.
How would you inform colleagues of final budget decisions and applications, in line with reporting and financial management responsibilities, within your relevant work area?
Write your answer in 100-150 words.
1. Budget Review Step 1: Post all invoices, receipts, income, and reconcile
bank statements.
Typical sources of income for the organisation.
Gross profit margins.
Overheads such as electricity, rates, maintenance, salaries, office costs, etc.
Loan repayments.
Other costs that can be easily overlooked
2. Budget Review Step 2: Run a Variance Report.
3. Budget Review Step 3: Look for the red!
4. Budget Review Step 4: Look at the Variance columns.
The budget report may be prepared daily, weekly, fortnightly or monthly. The cost office is
responsible to prepare the budget report. The systematic preparation of budget report is acting a
best-cost control device.
How can regularly reviewing a budget, to assess actual performance against estimated performance, assist in the preparation of accurate financial reports? Write your answer in 50-100 words.
What is my income? Start with your monthly take-home paycheck. ...
What are my debts? Add up your monthly debts, including any
mortgages, car loans, credit card payments, student debt, etc. ...
What are my expenses? ...
Does it add up and, if needed, what can I change? ...
What are my priorities? ...
How can I make this sustainable?
Explain the term ‘financial commitments’ and reason to incorporate these into budgets and budget reports. Write your answer in 150-200 words.
Budgets are used to plan, monitor and control spending throughout the
organisation in order to manage financial resources effectively. They also
authorise and delegate authority for decision making based on finance.
What are the four (4) steps to investigate and manage significant budget deviations? Write your answer in 100-150 words.
1. Budget to zero before the month begins. ...
2. Do the budget together. ...
3. Every month is different. ...
4. Start with the most important categories first. ...
5. Pay off your debt. ...
6. Don't be afraid to trim the budget. ...
7. Make a schedule (and stick to it). ...
8. Track your progress.
Critical thinking, attention to detail and excellent communication skills are all important.
Since budget analysts often work with tight deadlines, make a point to discover their timemanagement and multi-tasking skills. A budget report is written to show how a given business is
managing its funding. It is prepared by accountants and reviewed by managers and executives
responsible for operations and production. The purpose is to see how the company spends its
available funds and how much is available for new products, for example.
4 Questions to Help You Effectively Monitor Your Budget (And What To
Do If Your Budget Isn't Met)
How close did the business come to the budgeted figures?
What adjustments, if any, should be made to the current year's
budget?
What adjustments, if any, should be made to budgets in future years?
Explain the importance of analysing the changes in the internal and external environment and making adjustments to mitigate any variation/deviation? Give two (2) examples for each. Write your answer in 150-200 words.
An internal analysis examines your organization's internal environment in order
an internal analysis allows you to identify the strengths and weaknesses of
your organization. In many ways, the external environment can predict the trends and needs
of consumers, and managers need to be able to interpret consumer trends and apply those
insights to the company. In many ways, the external environment can predict the trends and needs
of consumers, and managers need to be able to interpret consumer trends and apply those
insights to the company. Whether consumers are becoming frustrated with the company itself, are
growing tired of the competition (and therefore opening up potential purchasing power), are
looking for a new product, or are developing new concerns regarding the company's image, the
power of the consumer to change the economics of the company should be recognized by
managers.
Explain how collecting and recording relevant information, helps in future budget preparation. Write your answer in 50-100 words.
Your current budget is an important indicator of how you should plan your
future budget. ... Reviewing the budget and adjacent performance
reports helps businesses understand the specific elements in their mode of
operation
Explain the following types of budgets that are prepared by management in organisations. Explain your answer in 50 - 75 words for each.
Cash budgets
Cash flow budgets
Departmental budgets
Event budgets
Project budgets
Purchasing budgets
Sales budgets
Wage budgets
Whole of organisation budgets
Cash Budgets: A company's estimated cash inflows and outflows for a given time period is known as a cash budget.
Cash Flow Budgets: A cash flow budget makes an estimation of the company's cash flow for a given time frame.
Departmental Budgets: A departmental budget is a financial plan that details spending for the following month or fiscal year at the departmental level.
Event Budgets: A budget for an event is an estimate of the expenses that will be incurred because of preparations and research.
Project Budgets: The total anticipated costs required to accomplish a project over a specified time frame make up a project budget.
Purchasing Budgets: The quantity of goods that a business must acquire during each budgetary period is specified in a procurement budget.
Sales Budgets:
Wage Budgets: The sum of money set aside for a specified period of time specifically for paying salaries is known as a wage budget.
Whole of organisation budgets: The complete anticipated budget for an organization for a specific time period is known as the whole of organization budget.
List and explain any ten (10) common budget terms used in relation to preparing and monitoring budgets, within an organisation.
Budget – A formal written statement of management’s plans for a
Static budget – A projection of budget data at one level of activity.
Participative budgeting – A budgetary approach that starts with input
from lower-level managers and works upward so that managers at all
levels participate.
Flexible budget – A projection of budget data for various levels of activity.
Master budget – A set of interrelated budgets that constitutes a plan of
action for a specific time period.
Financial budgets – Individual budgets that focus primarily on the cash
resources needed to fund expected operations and planned capital
expenditures.
Operating budgets – Individual budgets that result in a budgeted income
statement.
Budgeted income statement – An estimate of the expected profitability of
operations for the budget period.
Sales budget – An estimate of expected sales revenue for the budget
period.
Merchandise purchases budget – The estimated cost of goods to be
purchased by a merchandiser to meet expected sales.
Production budget – A projection of the units that must be produced to
meet anticipated sales.
Direct materials budget – An estimate of the quantity and cost of direct
materials to be purchased.
Outline any three (3) accounting software packages, which can be used for preparing and monitoring a budget. Answer each, in 50-100 words.
Scoro. Scoro combines budgeting features with other tools to manage your entire
different tools called Maestros for budgeting, forecasting, financial reporting, etc. ...
Prophix. ... for budgeting, forecasting, financial reporting, etc. ...
Float. ...
Planguru. ...
GIDE. ...
Maxiplan. ...
Tagetik.
Explain the following with 100 – 150 words each:
Budget formats, budget performance and financial reports
Financial reporting procedures and cycles
Although a variety of budgeting formats is used by governing
authorities, there are four which are by far the most popular – line item budgeting, pro- gram budgeting, performance budgeting, and
Zero-based budgeting.
The reporting cycle period can be a year, fiscal quarter, or a specified
period. The cycle begins with the initial transaction entries in the
journal and ends with the published financial statements of the
company and the closing of all the temporary accounts.
Explain any four (4) techniques for creating budget estimates in 25 – 50 words for each.
The techniques for budget estimation are:
•Analogous Estimating. ...
Parametric Estimating. ...
Bottom-Up Estimating. ...
Three-Point Estimating.
List any seven (7) common reasons for deviations and explain how to manage budget deviation.
1. Budgeting is a complex process, which is becoming increasingly affected by
the company's environment. ...
2. Use data on the market environment. ...
3. Define the market, competition and substitutes. ...
4. Make use of econometric models. ...
5. Collaborate with other departments. ...
6. Learn the methodology of data preparation
