Budget Management

Running head: BUDGET MANAGEMENT
Budget Management
Name of the Student
Name of the University
Authors Note
Course ID

1BUDGET MANAGEMENT
Table of Contents
Introduction:...............................................................................................................................2
Task 1: Understanding the impact of external and internal factors on budgetary planning:.....2
Assessing the need for long and short term budgetary plans in the business:.......................2
Relationship between functional departments and responsibility centers:............................3
Evaluation of internal and external sources of information used to determine cost, price and
demand:..................................................................................................................................5
Task 2: Understanding how the manage budget:.......................................................................6
Assessing the strategies of managing the budget variance:...................................................6
Assessing how the budgetary management controls are useful in optimizing business
performance:..........................................................................................................................7
Task 3: Understanding how to analyse the cost information in business:.................................8
Distinguishing between the different types of cost occurred by the businesses:...................8
Discussion regarding the use of cost data for business planning and control purposes:......10
Evaluation of method and techniques of costing:................................................................11
Conclusion:..............................................................................................................................12
References:...............................................................................................................................13

2BUDGET MANAGEMENT
Introduction:
The business owners develop the plans to reach their overall goals and they generally
consider it valuable to separate the planning in stages. This would enable the business owners
to keep track of the immediate enhancements whereas assessing the progress in the direction
of future goals and targets (Sponem and Caroline 2016). The different frames of planning
procedure emphasis on the time-sensitive features of the organization structure and
environment. A business owner can distinguish the planning depending upon the time frame
of inputs and anticipated outcomes.
The period of budgeting is treated as the noteworthy factor in developing the
comprehensive programme of budgeting. The current report is based on addressing the top
management of HTC Corporation to assess the requirement of long term budgetary plans and
short term budgetary plans. The report would also address the relationship between the
functional departments and responsibility centres. In the later part of the report an address
towards determining cost, price and demand.
Task 1: Understanding the impact of external and internal factors on budgetary
planning:
Assessing the need for long and short term budgetary plans in the business:
Short-term budgetary planning:
Short term budgetary planning is important for a business because it takes into the
account the characteristics of the company currently and developing the strategies for
planning. The situations of production equipment or problems related to quality of the
product are treated as the short term concerns (Srivastava 2018). The short term budgeting
looks into the aspects of the following three months of operations. The objectives of this
budget is to assure that the business is liquid enough to pay the debts before it becomes

3BUDGET MANAGEMENT
overdue. The short term budgeting is viewed as the element of survival for the company
because if the business does not have the money to pay their debts, they might risk losing
their business. The short term budgeting is necessary for HTC so that it can review the bank
balances and outflow of cash for the later six to eight weeks to determine the amount of cash
payable. It also helps in determining what receivables are coming up and the amount of sales
a business anticipates to make (Otley 2015). The short term budgeting is helpful in
ascertaining or predicting the balance and considering the additional source of income to
cover the payments.
Long-term budgeting:
The long term budgeting is generally neglected in the businesses. It takes into the
account the period of 12 months of operations and involves periodic reviews regarding each
quarter or month. Using them, can make better and more well-informed decision in their
business. Fundamentally, the long term budgeting involves putting the strategic goals in
numbers (Schaltegger, Stefan, and Roger 2017). The long term budgeting involves better
forecast of the amount of cash inflow and outflows a business would experience in future.
The long term budgeting is helpful for HTC in providing a comparative result with the actual
results by adjusting the budgets accordingly to meet the future needs. Reviewing of budgets
would reveal the areas of business that are highly profitable or less profitable, providing an
indication of which projects should be considered and the projects that should be dropped.
Relationship between functional departments and responsibility centers:
The responsibility center is treated as the functional entity inside the business which
has its own goals and objectives that have the dedicated staff, process and financial reports.
The responsibility center is used as specific responsibility for revenues that are generated,
expenditure occurred and funds that is invested by the individuals (Johansson, Tobias, and