Budget Management

Budget Management

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. Need for long and short term budgetary plans...................................................................3
2. Relationship between functional departments and responsibility centres..........................4
3. Internal and external sources of information used to determine cost, price and demand.. 5
TASK 2............................................................................................................................................5
1. Strategies used to manage budget variance........................................................................5
2. Budgetary management controls are used to optimize business performance...................6
TASK 3............................................................................................................................................7
1. Distinguish between the different types of cost.................................................................7
2. Uses of cost data for business planning and control purposes...........................................8
3. Methods and techniques used to calculate business costs..................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In present time, it is important for company to manage and control their future expenses so
that incomes sources can be increased and maximum profit can be maintained to reach the yearly
goals. Budget management in general Ledger improves and enlarges companies’ budget and also
develop capabilities to recognize the most profitable business operation. Budgeting is the
mechanism whereby you build a strategy to invest financial income. Creating any budget plan
gives manager the opportunity to decide in anticipation if they might have enough resources
for doing the activities that support in growing business. Budget control helps administrators to
build several 'what if' possibilities for decision making purposes as well as to calculate the effect
of improvements, monitor modifications when the financial year progresses, review on-screen
forecasts, Business laws will avoid targets being unintentionally surpassed for either accounts or
programs, Budget for both programs and accounts. In this project HTC Corporation is selected
and different elements of budget and costing are discussed in the company operation.
In this report, need for long and short term budgetary plans, relationship between functional
departments and responsibility centres, internal and external sources of information used to
determine cost, price and demand is discussed. In addition, strategies used to manage budget
variance, budgetary management controls are used to optimize business performance, different
types of cost, uses of cost data for business planning and control purposes and methods and
techniques used to calculate business costs is also elaborated underneath.
TASK 1
1. Need for long and short term budgetary plans
A budget is a projection of income and expenditure for a given future duration, which is
generally, compiled which regularly re-evaluated. Manager within companies may create
expenditures for an individual, a group of individuals, a company, a country, or just about
everything that earns income and uses to meet the organisational goal. Budget period is a key
factor in the development of a complete and accurate budget management program. That is the
time during which manager will fairly render predictions and devise budgets. In HTC manager

1usually plans a short-term estimate and a long-term estimate about their income and expenses so
that every business goals can be attained in desired time.2
Short-term cash flow budgeting
Cash flow budgeting for the brief period tends to look towards the upcoming 1-3 months of
the company's program. The aim is to ensure that the company is fully adequate towards
paying off loans before they would be overdue. Short-term financial planning is called the
HTC survival method, so if the resources are not enough to pay back the loans, then there might
be chances or risk related to losing the operations and profitability. Manager will measure the
HTC financial capital by deducting and applying all of the planned debits and credits within
the bank statement. If they expect that company surplus is smaller than the overall expenditures,
then manager will look for alternative revenue streams to fund certain payments for the period.
Long-term cash flow budgeting
Long-term budgeting of the cash flow is most often overlooked in companies. It
encompasses the next twelve months as well as performance reviews every time or couple of
days. Using them, manager of HTC will make smarter, more educated strategic decisions in
order to reach the desired targets. Preceding financial statements are really a useful starting point
for generating a spending plan for the long term. Using them as a guide, the projected profits
may be applied to the schedule, expenses of potential ventures and industry strategies to join.
Essentially, HTC long-term financial planning transforms the financial priorities into
percentages. Compare expected figures continuously with what users predicted earlier, as well as
modify spending plan and for future accordingly. Budget analysis will show fields of industry
that are much more and less successful, showing which ventures need to be scrapped and which
require further focus and funding.
2. Relationship between functional departments and responsibility centres
In companies, each and every functional department and responsibility centre are interlinked
with each other which help in executing every business operation in more systematic manner.
This partnership is really straight forwarding as well as another feature of a business organization
1 Hiltbrand, T., 2013. Behavior-Based Budget Management Using Predictive
Analytics. The Business Intelligence Journal, 18(INL/JOU-12-26713).
2 Berman, L., 2015. The Office of Management and Budget and the presidency, 1921-
1979. Princeton University Press.