Diploma in Accounting: Budgeting and Forecasting Techniques

Running head: DIPLOMA IN ACCOUNTING
Diploma in Accounting
Name of the Student:
Name of the University:
Authors Note:

2DIPLOMA IN ACCOUNTING
Table of Contents
Answer to Question 1:................................................................................................................3
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................4
Answer to question 4:.................................................................................................................6
Answer to question 5:.................................................................................................................7
Answer to question 6:.................................................................................................................7
Answer to question 7:.................................................................................................................9
Answer to question 8:...............................................................................................................10
Answer to question 9:...............................................................................................................10
Answer to question 10:.............................................................................................................11
Answer to question 11:.............................................................................................................11
Answer to question 12:.............................................................................................................11
Task 1-Part 1:...........................................................................................................................12
Task 1-Part 2:...........................................................................................................................13
Task 2-Part 1:...........................................................................................................................13
Task 2-Part 2:...........................................................................................................................15
Task 2-Part 3A:........................................................................................................................15
Task 2-Part 3B:........................................................................................................................16
Task 2-Part 4:...........................................................................................................................16
References:...............................................................................................................................20

3DIPLOMA IN ACCOUNTING
Answer to Question 1:
Budgets are helpful for the business in tracking and managing their resources.
Business generally uses numerous types of budgets to measure their spending and creating
efficient strategies for increasing the assets and revenues1. The below listed are the types of
budgets that are commonly used by the business are as follows;
a. Master Budget
b. Operating Budget
c. Cash Flow Budget
d. Sales Budget
e. Production Budget
f. Financial Budget
Answer to question 2:
The budget cycle comprises of four phases and they are
a. Preparation and submission
b. Approval
c. Execution, and
d. Audit and evaluation2
Answer to question 3:
The purpose of each of the following budgets are
1 Ahmad, Nurul Nadiah. "Investigating the Factors Influencing Users’ Resistance towards
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2 Alanezi, Faisal, et al. "Factors Influencing Students' Choice of Accounting as a Major:
Further Evidence from Kuwait." (2016).

4DIPLOMA IN ACCOUNTING
Cash Budgets:
a. Expected revenue: The purpose of cash budget is estimating the available cash or the
amount that is expected to be in hand during the period of budget to cover the
expenditure3.
b. Expected Expenditure: Another purpose of cash budget is covering the expected
expenditure and providing the summary of everything the business would have to pay
during the period of budgeting4,
c. Addressing the shortfalls: The purpose of cash budgeting is addressing shortfalls
when the expected expenditure surpasses the expected revenue. The cash flow budget
alerts the business of the upcoming problem by promoting the business to act
proactively and seeking alternatives5.
Labour Budget:
a. The labour budgets is used to compute the number of labour hours that would be
needed to manufacture the units itemized in the production budget.
b. The labour budget is helpful in determining the number of employees that would be
needed to staff the manufacturing area across the budgeted period6.
3 Al-Farah, A., Sinan Abbadi, and E. AL Shaar. "The accounting and auditing profession in
Jordan: Its origin and development." Developing Country Studies 5.8 (2015): 167-179.
4 Anas, Norazmi, et al. "The Use of Digital Quran Application among Diploma Students of
UiTM Perak Branch, Tapah Campus." International Journal of Academic Research in
Business and Social Sciences 7.2 (2017): 561-569.
5 Appiah-Adu, Kwaku, and Mahamudu Bawumia. Key determinants of national development:
Historical perspectives and implications for developing economies. Routledge, 2016.

5DIPLOMA IN ACCOUNTING
c. The budget offers information at the aggregate level and it is not used typically
specific hiring and requirements of lay off.
Production Budget:
a. The production budget is prepared to compute the number of units of products that
should be manufactured and it is obtained from the combination of sales forecast7.
b. The production budget is helpful for the company in forecasting the level of
production for the period when there is a fluctuation in demand.
c. The production budget is prepared in forecasting the cost of having the goods
manufactured by someone else8.
Materials Budget:
a. The direct material budget is prepared to calculate the materials that is required to be
purchased during the time period to fulfil the need of production budget.
b. The direct materials budget is prepared to attain the desired ending inventory for each
material that is added to the required quantity to attain the needs of productions and
the total sum is lowered to project the beginning inventory in order to ascertain the
sum of materials to be purchased9.
Overhead Budget:
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investment in Higher Apprenticeships in accounting." Accounting Education 25.5 (2016): 502-518
7 Gevorkyan, Aleksandr V., and Otaviano Canuto, eds. Financial Deepening and Post-crisis
Development in Emerging Markets: Current Perils and Future Dawns. Springer, 2016.
8 Global, T. B. "Report 2016." Methods used by WHO to estimate the global burden of TB
disease, Glaziou P., Sismanidis C., Zignol M., Floyd K., Global TB Programme, WHO,
Geneva, Switzerland (2016).
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6DIPLOMA IN ACCOUNTING
a. The purpose of preparing the overhead budget is that it contains all the manufacturing
costs apart from the cost of direct materials and direct labour. The information that is
contained in the manufacturing budget forms the portion of COGS line in the master
budget10.
b. The purpose of preparing the overhead budget is converting the total costs into per-
unit overhead allocation that is used to derive the cost of ending finished goods
inventory.
Answer to question 4:
Budget negotiations is contentious but forms the productive time in the company.
Budget negotiations is considered as the productive as company can understand how it can
work to work more harmoniously when each of the department manager can understand the
needs and requirement of each of the department. Budget negotiations is used in taking
decision regarding how each item would create an impact on the company’s bottom line11.
Answer to question 5:
The Budget Milestones helps in reconciling the complicated budget data and surveys
in the easily understood graphs, charts and table. Each of the budget milestone report is
customized as per the intricacies of the unique budget procedure and the charts of accounts.
Budget milestone is regarded as the powerful tool for administering the budget amid the
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development in Greek hotels." International journal of data analysis techniques and strategies
7.2 (2015): 187-202.
11 Lipunga, Andrew Munthopa. "Integration of Ethics in Malawian Public Accountancy
Education." Global Journal of Management And Business Research (2015).