Objective of preparing a budget for Twin Rivers Café

Individual Coursework
(Finance)

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Objective of preparing a budget for Twin Rivers Café...............................................................1
Variance between actual and planned budget..............................................................................2
Explaining variance concerning to management.........................................................................3
Advise to Twin Rivers Café........................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
A budget is a financial plan which helps an organisation to plan their revenues and
expenditure so that any contingencies can be avoided (Chohan and Jacobs, 2018). The aim main
of this report is to develop the understanding about the concepts of budgeting and variance. The
organisation which is considered in this report is Twin Rivers Café which prepares meals for
tourists. In this report, various objectives of preparing a budget is identified for the selected
company along with determining the variance in their developed budget. At last, advice to this
company is also given to facilitate them so that they can support their objectives of attaining
growth and maintaining survival.
MAIN BODY
Objective of preparing a budget for Twin Rivers Café
There are various objectives of creating a budget for Twin Rivers Café which are:
 Twin Rivers Café is a small organisation which seeks to attain growth and development.
For this, it is important for them to develop a budget which will provide them a direction
in which they can lead. Budget will be prepared with an objective to have a good sense of
direction about which month has highest sales and which month needs improvement.
 Another objective of creating a budget for this company is to predict the cash flows. By
using budgets, management of this company can predict their next month’s sales revenue
and accordingly plan for investing that revenue amount in purchasing of machinery by
which they can grow and develop (Roncalli, 2016). By predicting future revenue,
organisation can also predict cash crises months and can save an additional contingent
fund for that month.
 Allocation of resources is also an objective for Twin Rivers Café to prepare budgets. By
using budgets, this company can identify their future needs for resources such as cash,
raw material etc. and then according allocates these resources to activities so that
operating can run smoothly.
 Being a small organisation, it is important for Twin Rivers Café to regularly monitor
their growth so that they can identify the elements which help them in growing. Using
budgets by this organisation objectifies to identify growth rate (Rubin, 2019).
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