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Budgeting Analysis Report - Leeworthy Ices company

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Added on  2019-12-28

Budgeting Analysis Report - Leeworthy Ices company

   Added on 2019-12-28

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Budgeting Analysis Report - Leeworthy Ices company_1
Table of ContentsINTRODUCTION...........................................................................................................................3PART 1............................................................................................................................................3I. An understanding of how Leeworthy Ices benefits from having a budget and how thebudget process helps development of the business................................................................3ii. The application of traditional budgeting approaches to a business Leeworthy Ices, key areasof the business which the budget process needs to address....................................................4iii. Traditional budgetary method and its benefits..................................................................6iv. Alternative methods of budgeting and its importance ......................................................7V. Traditional approach of budgeting ...................................................................................8VI. Analysis over the methods (or a combination) would be more appropriate to LeeworthyIces........................................................................................................................................10Budget-Collection of data in a single year is known as budget. It calculates the overall budgetin one financial year.............................................................................................................10COCLUSION.................................................................................................................................12REFERENCES..............................................................................................................................12
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INTRODUCTIONThis report contain the detail information about company Leeworthy ices. Under this thedetail is given on the techniques used by Leeworthy ices for making their budget like zero basedbudgeting and incremental budgeting. The information on traditional and non traditional methodsof budgeting are also given under this with the detail description about their advantages anddisadvantages. This report contain or tells about most of the popular techniques or approaches ofbudget used by most of the enterprises in today's world. In this report various advantages as wellas disadvantages of incremental and zero base budgeting and the procedure for using thesetechniques has been described in it. PART 1I. An understanding of how Leeworthy Ices benefits from having a budget and how the budgetprocess helps development of the businessA budget is an estimate of costs or revenue which reflects the future financial conditionof company. It an important tool for the company and it also used as an action of plans to beprepared for targeting the quantified objectives, standard for measuring the actual performanceetc. In Leeworthy Ice company, the managers has to properly understand the benefits of budget.Budgeting is that process or tool where the managers prepare the budget for deciding the whereto allocate the funds in different activities (Grigg and Votaw, 2011). A common objective of thecreating the budget is for judging the employee performance every year with the use of variousvariance of the budget. A budgeting process is typically begins with a strategic planning which are made by thesenior management. These plans include a sales budget, direct material budget, productionbudget etc. These all plans should be roll up into master budget which contains the financialstatement of the company. A good budget process is always responsible for adhering the budgetand proper implementation in organisation objectives for creating the budget. Following are thebudget process which help Vinita to prepare proper for the company.Determining the flow of information – The company has to gathered all the informationor data which should be compile a budget in one or two ways. The senior management has toestablish priorities and projection that which has to be achieved first.
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Deciding what measures are taken by organisation – The manager has to decide thatwhat he/she will take measures that whether the information is related with products or projectwill based on its region of operations. Gathering historic data – Once, the company has decide that in which segment theyhave to perform their functions properly, then they have to gather the historic performance ofinformation (Hansen, 2011). The historic performance of data includes the financial statement ofthe company. The manager has to use proper tools and techniques which will help them tocollect specific data. Making Projections – The forth step is to make the projects for coming years. With thehelp of budgeting process Leeworthy can make good projections. These projection can be simpleor complicated. Determining break-even point - In last step, the manager has to understood whether thecompany is earning the profits or not. Break even point are depends upon many ways such asbreak even in units or sales. Further, the benefits of budget can be prepared from a range of strengthened managementto increase the financial support (Henttu-Aho and Järvinen, 2013). The following are the benefitsof budgets.Budget provides the financial road map - Budget help the organisation in outlining theresources that how much required by the company. Budgeting process serves a powerfulplanning tool for the higher authority.Budget is an effective tool of management - Through the budget the company cantrack their goals and make corrections if needed to achieve the goals of the organisation.Budget provides internal control – It helps the organisation to effectively monitor thefinance. The company has to make budget on regular basis to diversify the financial risk.ii. The application of traditional budgeting approaches to a business Leeworthy Ices, key areas ofthe business which the budget process needs to addressIn every business traditional budgeting is a important tool. Budget plays a important roleof tool for formulating the business strategies planing their implantation allocation of resourcesmonitoring the expenditure improving the performance Traditional budgeting is inflexible andinefficient. In dynamic and demanding business environment traditional budgeting helps in
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