Prepare Operational Budget Assignment

Prepare Operational Budget

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Assessment Activity 1 .....................................................................................................................1
TASK 1.1 ........................................................................................................................................1
What is budget........................................................................................................................1
Different types of budgets......................................................................................................1
Budgetary control principles..................................................................................................1
TASK 1.2 ........................................................................................................................................2
Importance of communicating budget planning to peers.......................................................2
TASK 1.3 ........................................................................................................................................2
Preparation of annual budget for 2016...................................................................................2
TASK 1.4.........................................................................................................................................2
Monthly budgeted Profit and Loss estimate for 2015............................................................2
TASK 1.5.........................................................................................................................................3
Purchase budget......................................................................................................................3
TASK 1.6.........................................................................................................................................3
Worksheet...............................................................................................................................3
TASK 1.7 ........................................................................................................................................4
TASK 1.8.........................................................................................................................................5
Budget variance......................................................................................................................5
TASK 1.9.........................................................................................................................................6
Discuss forecasting techniques...............................................................................................6
Double-entry accounting........................................................................................................7
Variance analysis....................................................................................................................7
Assessment Activity 2......................................................................................................................7
TASK 2.1.........................................................................................................................................7
Preparation of budget objectives............................................................................................7
TASK 2.2.........................................................................................................................................7
Sales budget............................................................................................................................7
TASK 2.3.........................................................................................................................................8

Production budget...................................................................................................................8
TASK 2.4.........................................................................................................................................8
Cash budget............................................................................................................................8
TASK 2.5.........................................................................................................................................9
Budgeted income statement....................................................................................................9
TASK 2.6.......................................................................................................................................11
Budgeted balance sheet........................................................................................................11
TASK 2.7.......................................................................................................................................12
Stakeholders and consultation methods................................................................................12
TASK 2.8.......................................................................................................................................13
KPI (Key Performance Indicators).......................................................................................13
TASK 2.9.......................................................................................................................................13
Budgetary reports.................................................................................................................13
Assessment Activity 3....................................................................................................................13
Budget Objectives................................................................................................................13
Significance of preparing budgets........................................................................................13
Budgets creates goodwill......................................................................................................14
Convince stakeholders before budget implementation.........................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................14

INTRODUCTION
Operational budgets are crucial for business to prepare so that forecasting about future
can be made easily. The present report deals with various assessments engaged in preparation of
operational budgets so that meaningful results may be obtained.
Assessment Activity 1
TASK 1.1
What is budget
Budget is a document containing financial plan of company for the coming period
including anticipating sales and estimated expenses.
Different types of budgets
Operating budget
This budget is prepared for estimating income and expenses for the coming year. All
costs should be forecasted to prepare budget (Pal, 2018 ).
Production budget
Production budget is prepared for maintaining level of production so that adequate units
may be manufactured with much ease having estimation of sales and inventory of finished
goods.
Sales budget
Sales budget is prepared to analyse expected units to be sold in a particular period.
Master budget
It is complete segregation of all the budgets so that overall picture of financial health may
be assessed.
Budgetary control principles
Budgetary control principles are used to record actual performance and then compare the
same with planned performance so that variances can be easily found out. Corrective action can
be taken to remove variances.
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