Bill Wholesale Company: Budgeting and KPI Analysis Report

This report analyzes the importance of budgeting for Bill Wholesale Company, highlighting its absence and the resulting challenges in goal attainment. It emphasizes the role of budgets in decision-making, resource allocation, and performance measurement. The report identifies key performance indicators (KPIs) crucial for assessing the company's success, including revenue improvement, process-cycle time, cost reduction, and customer satisfaction. It provides guidelines for effective budgeting, such as managing expenses, accurate forecasting, setting attainable and measurable goals. The report also discusses the structure of setting a budget, including management responsibilities, communication channels, and the organization of budget components. It concludes by stressing the interdependence of various departments in achieving organizational goals and the need for effective communication between them.

Budgeting

TABLE OF CONTENTS
Question A.................................................................................................................................3
Question B..................................................................................................................................3
.Question C.................................................................................................................................4
Question D.................................................................................................................................6
References..................................................................................................................................7

QUESTION A
Business entities are required to have prepared appropriate budgets in order to make
better decisions and setting the decisions and measures of various segments. Usually, firms
create a budget on a yearly basis, which, formerly permitted, come into existence as a budget
or annual plan (Dudin and et al., 2015). In the present scenario, Bill Wholesale Company is
not having any provision relating to the preparation of budgets for current year forecast as
well as sales plan. Several purposes are served by a budget that includes; it is used by
managerial authorities in order to gain accord and harmony on the allocation of resources to
the company’s realization to measure goals for the year (Budding and Grossi, 2015). All
these are not available due to the absence of budgets preparation, and thus the company is not
able to attain its goal. Budgeting acts a goal setter and provides a measurement standard for
considering company’s position and performance (Colvin, 2014). Rather than focusing on
just profit and sales; Bill requires preparing budgets and assessing whether they are achieved
or not. In case, they are not attained then the reason behind the same should be ascertained.
QUESTION B
Key Performance Indicators are the appropriate manner of keeping a check on the
performance and to ascertain whether they are successful and the extent to which they are
required to improve. The KPI which is required to be assessed by Bill comprises:
 Revenue Improvement
 Process-Cycle Time Improvement
 Decrease in cost
 Higher customer satisfaction
It is to be remembered that an effective KPI is measurable and consistent which
comprises metric and a target. The target specifies the goal of the company, i.e., for example,
a 5% decrease in cost of the product (Cardos, 2014). The benefit which can be attained
through the quantifiable budget is that company can measure and take corrective action
faster.
Other guidelines which are necessary to be followed before finalizing the budget before the
start of the forthcoming year are:

 Managing Expenses: Bill can reduce expenses through appropriately monitoring them
and ascertaining the expenses which are not necessary for the business.
 Forecast Accurately: Further, the forecast should be done in accordance with the
historical data as well as the benchmark which has been set for future goals.
 Setting Attainable Goals: The goals are required to be attainable with reasonable
efforts so that staff works together for attaining common goals (Becker and et al.,
2016).
 Measurable Targets: The targets should be made measurable so that it could be
ascertained that whether it has attained or not and the extent to which it requires to be
improved.
.QUESTION C
Effective Structure in setting budget:
Managing expenses
Forecast Accurately
Setting Attainable goals
Measurable targets

Guidelines and Management responsibility in setting budget:
 The extent and authority along with the responsibility of top management are
prepared to delegate responsibility to other section managers.
 The manner of communication channels and method of resolving any existing
conflicts should be made clear so that it could be resolved at the initial stage.
 It should be remembered that prepared budgets should be attainable else it could
make staff lose their confidence.
Organization of various parts of the budget:
Owner
Accountant Managing
Director
Sales
Marketing
Manager
Staff
Ordering
Manager
Staff
Warehousing
Manager
Staff
Distribution
Manager
Staff
Administration
Manager
Staff

The Manager role is to manage their own areas which have been provided to them. The
organization chart is designed in order to specify the place of each person in project structure.
Further, the top authorities have more responsibilities in comparison to members who are
located at the bottom (Walther and Skousen, 2014). Thus, lines of communication are
provided in the same structure which specified the manner of communication and the way of
resolving issues which arise while working in the organization.
QUESTION D
The aim which has been predetermined can be attained only in the case when all the
activities of the organization have been conducted with efficiency. Every activity is linked
with each other; such as sales and expenses relating to it (Martí, 2013). It is necessary to
ascertain that required amount of expenses for the goods which are in demand are done in an
appropriate manner or not. The detail of good in demand will be attained from goods
department and information relating to expenses will be attained from administration
department. However, these both are a different department; but it is necessary that these
departments coordinate with each other and move forward (Cuganesan, 2017). This is the
only way through which goals can be achieved. In the same manner, other departments are
also dependent on each other. Thus, manager of each department should communicate
important information which relates to their department of reasonable intervals so that the
whole organization works in one direction.

REFERENCES
Becker, S.D., Mahlendorf, M.D., Schäffer, U. and Thaten, M., 2016. Budgeting in times of
economic crisis. Contemporary Accounting Research, 33(4), pp.1489-1517.
Budding, T. and Grossi, G., 2015. Public sector budgeting. Public Sector Accounting, pp.122-
144.
Cardoș, I.R., 2014. NEW TRENDS IN BUDGETING-A LITERATURE REVIEW. SEA:
Practical Application of Science, 2(2).
Colvin, J.H., 2014. CEO report: Budgeting for the long-term. Company Director, 30(5), p.6.
Cuganesan, S., 2017. The design of performance budgeting processes and managerial
accountability relationships. Public Management Review, 19(7), pp.954-971.
Dudin, M.N., Kucuri, G.N., Fedorova, I.J.E., Dzusova, S.S. and Namitulina, A.Z., 2015. The
innovative business model canvas in the system of effective budgeting.
Martí, C., 2013. Performance budgeting and accrual budgeting: A study of the United
Kingdom, Australia, and New Zealand. Public Performance & Management Review, 37(1),
pp.33-58.
Walther, L.M. and Skousen, C.J., 2014. Budgeting: Planning for Success. Bookboon.
.