Sample Assignment on Budgeting

Snappy drinks plc

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 purposes of preparing a budget; what processes the company needs to follow....................1
P2 Demonstrate the application of traditional budgeting approaches to plan future cost
management for this specific business. .......................................................................................3
P3 traditional budgetary system is appropriate to all or any parts of the business......................4
TASK 2............................................................................................................................................4
P4 Alternative budget methods: rolling budgets, zero based budgets and activity based
budgets. Explain how each method attempts to improve on the traditional approach ...............4
P5 these methods and elements of budgeting could be performed more effectively using an
alternative method .......................................................................................................................5
P6 Analyzing whether one of these methods (or a combination) would be more appropriate to
the company. ...............................................................................................................................7
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Budgeting is the process of creating and preparing the plan according to required money.
This is the financial plan which define the different statements such as financial statements, cash
flow statements, profit and loss statements etc. these statements is helps to company for forecast
the budget for future growth. For better understanding the budget, Taken the Snappy drink plc it
is the international manufacturer of energy drinks. They produce 60 different products. The main
aim of company it's that they launch the new product of health led drink by the use of different
ingredients and flavors such as different fruit flavor, and provide low sugar drinks to improve the
quality of product. The report will provide the outline about the different budgeting purpose also
describe the needs of process and how the budget process provided help to develop the business
model. The report will further explain the different budgeting approaches that help to mange the
cost of the Snappy drink plc. Also, report will describe the traditional budgetary system that this
is appropriate or not to all or any parts of the business. The report will describe that company use
the different budget method dot improving the traditional method. Further report will describe
that methods would be more suitable or not to the company (Wildavsky, 2017).
TASK 1
P1 purposes of preparing a budget; what processes the company needs to follow
Purpose of preparing a budget
Forecast of income and expenditure
Budgeting is the important part of every organization. This provide the help to making
the better plan and process (Bogsnes, 2016). The Snappy drink plc owners and managers need of
budget in order to identify and predict whether a new product will make profit or not. The main
purpose of budgeting is that its provide the best model to identify the strategy that how the
business might run and perform good or not, also budgeting is provided the different strategies,
plans which helps to implementing in the business. For launch the new product in the market it
its needed to Create the business plan, the manager of the company make sure that they use the
best plan to launch the new product in the market they construct a Business Plan, also forecast
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the profit and loss statement for identify the income and expenditure and generate the
profitability.
Budgeting is the tool for decision making
Budgeting is the best tool for making the good decision. The main purpose of the
budgeting is that described the financial statement of the company for making the best decision.
For example Snappy drink plc will manage the responsibility they control their expenditure.
When they launch their new product so they create the budget of advertising and also make the
plan that how much money they expend in their advertising (Miller, 2018).
Monitoring performance of business
The purpose of budgeting is to manage performance of the company by forecasting the
different statements such as financial statements, cash flow statements. These statements hep ti
identify the performance of the company (Gallani, Krishnan, , Marinich,. and Shields, 2019).
Process company need to be follow
Cash flow budget
Cash flow budget is the helps to Snappy drink plc for managing the cash according to the
definite time period. The budget is described the activities of cash when the cash comes in and
go out in the business. So company need to follow this process of budget in their business to
manage their cash
Master budget
Snappy drink plc can use this budget for forecast the complete image of the financial
activity. A master budget helps to design the individual budget of the company. So company
need to follow this budget that helps to track and manage all the resources of the business also
describe all financial activity of the company (Tosun, and Bağdadioğlu, 2016).
Operating budget
Operating budget helps to identify the income and expenditure of the company. So
Snappy drink plc can use the process of budget to identify the profit and loss of the company.
An operating budget is described the annual budget of the company . Operating budget is helps
to identify the cost of the company. This budget is analyses the different cost such as salary,
production cost, training cost, advertising cost, manufacturing cost etc. these all cost is described
in the budget. It also includes the total value of resources required in the business. This helps to
identify the different cost of the company.
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