Operational Budget

OPERATIONAL BUDGET

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1 and 3.a................................................................................................................................1
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................4
3.b.................................................................................................................................................4
CONCLUSIONS .............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Budgeting refers to process creation of plan for spending the money. The plan about the
estimated incomes and its expenditures is known as budget. The creation of budget enables the
company to determine in advance whether the operations of company will be having sufficient
funds and profits after the end. Budgeting refers to balancing income with the expenses. The
budgeting is very important for every business as it helps the business organisations to forecast
about the future activities (Chohan and Jacobs, 2018). Corporations and businesses use it for
giving the business a direction to be followed. It enables company to keep its expenditures within
the budgeted levels to avoid overs spendings. It helps the company in comparing its results with
the actual levels of expenditures and income from the budgets framed by the business. The report
is based on the HMV Cycles that has made the budgets for the financial year and wants to
prepare the budget including the electric cycle sales.
TASK 1 and 3.a
The estimated budget of HMV Cycle for 2011 taking the budgeted figures of 2010 as base.
Account 2010 2011
Bike Sales 550000 583000
Electric Bike Sales - 75000
Merchandise Sales 125000 131250
Workshop Revenue 175000 192500
Total Income 850000 981750
Cost of Sales Bikes 330000 349800
Cost of Sales of Electric
Bikes - 45000
Cost of Sales Merchandise 80000 84000
Cost of Sales Workshop 20000 22000
Total Cost of Sales 430000 500800
Gross Profit 420000 480950
Operating Expenses
Wages 240000 243600
Bookkeeper Fees 15000 15000
Commission 12000 12000
Motor Vehicle Expenses 12000 12000
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