Budget Report - Snappy Drinks Plc
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Added on 2020-10-22
Budget Report - Snappy Drinks Plc
Added on 2020-10-22
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BUDGET - REPORT
Table of ContentsEXECUTIVE SUMMARY.............................................................................................................1PART 1............................................................................................................................................1i) Role of Budget in development of business.............................................................................1ii) Application of traditional budgeting approach to plan for future cost management...............3(iii) Analysis of traditional budgetary system..............................................................................4PART 2............................................................................................................................................5iv) Evaluation of alternative Budget Methods.............................................................................5v) Potential application of different budgeting method...............................................................6vi) Analysis of various budgeting methods in context of Snappy Drinks Plc.............................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
EXECUTIVE SUMMARYThis report summaries about the Budget report, it is a report which is used internally bythe managers to compare the actual performance with the budgeted performance. Basically abudget report is designed to find out the difference in the actual performance and the estimatedor budgeted projections for an specific period of time. The following report contains the detailedanalysis of traditional budget and the role of budget in development of business. It also states theother different alternative methods which can be used in preparation of budget. It also shows theapplication of different methods in order to enhance the company's financial position.1
PART 1i) Role of Budget in development of businessA budget is a list of all expected expenses which a company can incur and the revenueswhich a company can generate over a specific period of time (Bentley, Omer and Sharp, 2013).It is a formal report which shows the company's performance and profit which a company cangenerate from its operations during an accounting period. Managers use it as a tool to identify theproblems and improve the efficiency of its business operations in order to improve its financialposition. In Snappy Drinks Plc, managers also uses budget as a tool to find out the variance inthe estimated and actual performance of a company. It also prepares budget to find out theexpected revenue which it can generate after the launch of its new product and setting up of anew venture. Some of the purpose of budget is as discussed below:Forecast of Expenditure and Income: Budget is used as a tool for forecasting expenseswhich can be incurred by company to generate its revenue from its business operations.Managers uses previous year's budget to analyse the company's performance and identifythe reasons due to which company was not able to achieve its expected performance. InSnappy Drinks Plc company manager forecast the sales of its new product health ledenergy Drinks. As well as the expense which can incur in the establishment of newventure.Helpful in Controlling: Budget provide a complete framework to the managers whichcan be used to control the expense and improve the efficiency of its business operation toreduce the cost of production and increase its profit margin. It help managers to controlall the unnecessary cost and keep a track of uses of its funds flow. In Snappy Drinks Plc,managers control all unnecessary expenses and keep a check on its business operations toimprove the financial position of the company.Tool for Decision Making: Budget is used as a tool in decision making process becauseit provides all the needed information for decision making.(Chan, Chang and Chang,2013). Managers uses budget to identify problems and formulate new and effectivepolicy and strategies to overcome these problems and enhance its efficiency of businessoperations. In Snappy Drinks Plc managers analyse the previous budgets and uses thosebudget in the decision making process to launch its new and health led drink.2
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