Budgeting and Variance Analysis for Fleet Highlands Cafe

FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
a) Objective behind preparing budget by Fleet Highlands Cafe .................................................1
b) Report showing the revenues and spending variances for march ?.........................................2
c) Variances of concern to management. ....................................................................................2
d) Measures for maintaining the profitability and sustainability of Fleet Highlands Cafe .........4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Budgeting refers to creation of spending plan of the organisation which is known as
budget. Budget allows the company to determine the the future incomes and expenses by making
projections. It involves balancing the incomes and expenses of company. Budgets are prepared in
planning process for ensuring that the expenditures of the company are under control. The report
is based over Fleet Highlands Cafe which prepares foods and meals for citizens in the kitchen
which is located near local airport. The report will include the need for preparing budget how it
helps the company in managing the profitability of the company.
a) Objective behind preparing budget by Fleet Highlands Cafe
Budget is prepared by the organisation for projecting the revenues and expenditures for
future. The projections for futures expenses and incomes are made on the basis of previous
trends and analysing the market situations and conditions. There are different methods for
preparing budget by the organisation where the company uses traditional method of preparing
budget. Main motive of the Cafe behind preparing budget is of making excess revenues over the
expenses for maximising the profits. Profits of the company could not be maximised by any
formula. It requires constant efforts and effective analysis of the market forces that could
influence the business (Lowe, 2019). It helps the organisation in estimating the incomes and
expenses and financial position of the company. Budgets help company in preparing the action
plan that is designed for carrying out the operations of company.
Highlands cafe by making projection for the future sales is able to make allocation of the
resources more effectively. This helps in making effective utilisation of the resources over
different activities being carried by cafe. This provides a direction to the company for achieving
its goals and objectives with the available resources. The objective behind preparing budget is
also to keep the costs and expenditures of the company under control. Departments are aware
through the budgets that they are required to carry out their operations within the specified limit.
It prevents the department to make overspending and makes them to reduce the wastage of
resources. At the end of the period variances between the actual and budgeted figures are carried
out for identifying the areas that are required to be considered by the organisation (Akeem,
2017). It enables the company to achieve its defined goals and objectives by making effective
utilisation of the resources.
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