For every organization budget process is very important aspect.

Added on - 22 Sep 2019

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For every organization budget process is very important aspect. it provides top managementthe insight of performance of company and also provide basis for formulation of future policy.Budgeting process consists five essential aspect those are needed to be followed.1. Company need to determine sources of information for the budget process.2. Before starting budget process, management should determine what they want from suchprocess i.e. object of budget process should be clear.3. Management should collect the requisite data that they need to formulate budget process4. This is the most important step of budget process. in this step, management should estimatethe projected result5. at the end, management need to calculate their break even point. this is very important aspectof budget process. on the basis of this step, management determine their other results.on analyzing the budget of Bird Feeder, Management have made some wrong estimates.management should focus on the historical data to estimate future results. almost all estimationrelated to use of direct material, direct manufacturing labor and variable manufacturing overheadare wrongly estimated. Management should improve this aspect of process. (Adler, 2013)on analyzing the budget of Bird Feeder, we can find that company has been showing a positivesale variance on comparing actual sale revenue with budgeted sale revenue. however, companyhas been showing a negative variance for direct material and direct manufacturing labor. Themain reason for unfavorable direct material over utilization of direct material in productionprocess. Management should focus on effective utilization of direct material. Similarly, Directmanufacturing labor are also showing unfavorable. the reasons for result are also ineffective
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