Budgeting and Forecasting for On The Beach Company

Running Head: Budgeting and Forecasting
Management Accounting

Budgeting and Forecasting 1
Executive Summary:
The present report has been prepared to evaluate the worthiness of business of On The Beach
Company. As the company is operating under the apparel manufacturing industry of the
Australian economy, the industry as well as economic factors have been analysed while
determining whether it would be successful to carry the business in the upcoming years i.e.
year 2019 and onwards. Further, as a part of business analysis, various budgetary plan has
been prepared for 2019, keeping in mind the past trends and future anticipations. The
contribution analysis has also been undertaken for all the business product units of the
company and it has been found that the product segment Beach Bags is not going to generate
profitability for the business and hence it must be shut down. The financial performance of
the business is expected to be stable in the coming years as depicted by the budgets.

Budgeting and Forecasting 2
Table of Contents
Executive Summary:..................................................................................................................1
Introduction:...............................................................................................................................4
Budgeting function:....................................................................................................................4
Overview of Budgeted Results of 2019.....................................................................................4
Contribution Analysis:...............................................................................................................5
Cash Position:.............................................................................................................................7
Analysis of current market conditions and future predictions...................................................8
Conclusion with Recommendations:..........................................................................................8
References:...............................................................................................................................11

Budgeting and Forecasting 3
Introduction:
On the beach is the Australian firm that operates its business of manufacturing the swimwear
as well accessories for both male and females. The firm is mainly dealing in four products i.e.
one piece swimsuits for women, board shorts for men, beach towels and the beach bags. The
management of the firm is desired to set the targets and goals for the upcoming year i.e. 2019
and hence requires various types of budgets to be prepared. Budgeting practice will enable
the firm to determine the level of profitability that it can achieve in the subsequent years. All
such budgets will be prepared on the basis of past trends and future expectations from the
business as well as industry or market in which it operates.
Budgeting function:
Budgeting function is the main function of management accounting that facilitates financial
planning of the business. It allows the managers to estimate all the expenses and anticipation
of income that are going to occur in the coming period for which budgets are prepared (Hope,
Fraser, 2013). In the present case, On The Beach has just concluded its business for the year
2018 and on the basis of financial statements of the same year it requires the budget for the
next financial year.
Overview of Budgeted Results of 2019
The budgets have been prepared keeping in mind various factors that could affect the
performance of the business. The sales budget of the company is prepared on the assumption
that there will be lowest sales of the towel product of the company as only 1560 units are
expected to be sold. The product that is going to be sold in the highest proportion in year