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
Budgets are consider to be most crucial part for every kind of business as its plays a main
role in managing the expense for the future period as well as estimate income from these
expenditure. The main part reasons for writing this report is to define the objective of preparing
budget in Twin Rivers Cafes framing budgets which help in improving the overall business
performance. This report sums up the reasons for fluctuation in the current earning, net profit as
well as expenditure in respective company. In addition, report also covers crucial variance
activity and proper recommendation for company that support to reduce these variances.
TASK
A. Objective of preparing a budget for Twin Rivers Café:
In the present business environment, the concepts of budgeting is very much important as
it is consider as it help to forecasts sales revenue and different expenditure for particular period.
Budgets are reviewed and modified on the regular basis which help to reach the main target of
the period and increase overall profitability. A budget is used by executives of organizations
such as Twin Rivers Café as just an inner structure but does not often have to be disclosed to
third parties or creditors. The cumulative amount of output is subjected to funding budgets. Thus
spending plans is the primary way to monitor spending and revenue gaps by the financial
manager (Vance and et.al, 2016). When matching the projection with actual figures, businesses
will consider differences in estimated and actual costs. The larger the gaps, the greater the need
for administrative help to reduce the difference. In addition to the allocation of resources, a
budget may help to establish goals, track progress and schedule preparation. It allows the
company to take accountability for rising spending inequalities for those workers. A well-
designed strategy helps an organization to track its financial position. Although, expenditure
plans are effective enough to make strategies and plans by displaying the higher current expenses
on non productive activities which decrease the profit margin. Thus some of the main goals of
preparing budgets are discussed in the context of selected company:
Provide specific framework: Spending plan is primarily useful to give a business
instructions on the way to be implemented. It thus provides a mechanism for additional steps.
Normally manager of advised to execute a strategy for an organization with no better direction.
Clearly a budget wouldn't provide an appropriate structure if the Director discarded the budget