FNSACC503 - Manage budgets and forecasts

Running Head: Manage Budgets and Forecasts
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Project Report: Manage Budgets and Forecasts
(TASK 1)

Manage Budgets and Forecasts
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Assessment Task 1:
Question 1:
Purpose and objectives of budgeting:
The main purpose and objective of budgeting is forecasting the income and
expenditure, tool for making the decision and monitor the business performance of the
organization.
Question 2:
Key purpose and objectives of forecasting:
Forecasting helps the organization to identify the future performance of an
organization and offer basis to the management to make better decision accordingly (Madura,
2011).
Question 3:
Financial key performance indicators:
Key performance indicators are the measurement to gauge the financial performance
of an organization. It makes it easy for the management to prepare better budgeting reports
and forecast the future at better level. Financial key performance indicators of an organization
are as follows:
Gross profit margin
Aging accounts receivable
current ratio (Porcelli & Delgado, 2009)
Question 4:
Milestones are used in the budgeting and forecasting to identify the relevant
information and use it to construct the base for the future decisions and the strategy making
process of the business. It makes it easier for the management to make better budgetary
reports.

Manage Budgets and Forecasts
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Question 5:
Ethical consideration in budget forecast and projection depicts that an organization is
required to identify all the relevant and accurate data in order to present the better reports and
maintain the reliability in the reports. If the managers are collecting better and relevant
information and all the assumptions have been made on some better basis than the budgetary
reports would be better and the ethical consideration would also be improved (Higgins,
2012).
Question 6:
In order to prepare the budgets, it becomes important for a business to collect various
information and data so that the better reports could be prepared. Some of the data are as
follows:
Sales forecasting: Sales forecasting could be done through measuring the previous
year sales of the business and current demand of the products.
Purchase forecasting: On the basis of the sales forecasting and inventory level of the
business, the purchase units are measured in the business.
Question 7:
Forecasting the sales is main base to prepare the budget reports. On the basis of the
below information, sales unit could be forecasted in the business:
Plan the market
Forecast row by row (Unit sales, service units, recurring charges)
Identify the previous year sales
Growth rate in last few years in sales units
Current demand and competition level in the market
Assumptions about the current growth rate etc.
In order to forecast the information, mangers are required to directly measure the sales
unit and further the opening stock and required closing stock of the business is required to be
measure to decide the production level of the business.