Importance of Budgets for Twin Rivers Café

Finance

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
TASK...............................................................................................................................................3
A. Objective of preparing a budget for Twin Rivers Café:....................................................3
B. Report showing the company’s revenue and spending variance for July along with
explanation:............................................................................................................................4
C. Activity of variance should be of concern to management:..............................................5
D. Advise and Suggestions to Twin Rivers Cafe:..................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

EXECUTIVE SUMMARY
This report sums up the main goals of Twin Rivers Café's framing budgets with a view to
improving overall business performance. The report also summarizes a thorough report about
variations in the actual revenue, costs and profits figures of the respective corporation. Further
report includes a significant variance activity and advises or recommends to companies that these
variances should be minimised.
TASK
A. Objective of preparing a budget for Twin Rivers Café:
Budgets are general revenues/sales forecasts and various expenses for the
specified period ahead and are typically framed and reviewed on a periodical basis. A budget
acts as an internal structure by managers of corporations like Twin Rivers Café and is not often
required to be communicated by external entities like interested parties. Overall production
activities are subject to financial budgets. The budget is main method used to monitor
expenditure and budgetary discrepancies by financial analysts (Vance and et.al, 2016). Company
should consider inconsistencies between plans and actual-costs by comparing the forecast with
actual figures. The bigger the variances, the bigger the need for managerial assistance. A budget
could help to set priorities, track progresses and make contingency planning, in addition to
apportioning resources. This also encourages the corporation to have those employees
accountable for reducing budget disparities. A well-designed budget allows a corporation to
monitor where it is financially. It makes long-term strategical and visionary planning feasible by
showing deviations from the current operating expenditures. In this regard, some main budget
objectives are as follows:
Provide specific framework: A budget is specifically effective to provide a corporation with
directions as to the path to be pursued. It therefore provides a framework for another steps. A
Manager is instructed that a corporation that has no better direction should enforce a budget.
Obviously, if Manager immediately scraps the budget and he does not update it for another year,
a budget would not provide sufficient framework. A budget generates a significant framework
only if executives continually alludes to it and assesses personnel performance on basis of their
expectations.