Financial Planning and Budgeting: A Comprehensive Guide

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Manage Budgets & Financial Plans
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Table of Contents
Assessment Task 1...........................................................................................................................4
1. Budget or Financial Plans........................................................................................................4
a................................................................................................................................................4
b...............................................................................................................................................4
c................................................................................................................................................4
2. Making changes to Team Budgets or Financial Plans.............................................................5
a................................................................................................................................................5
b...............................................................................................................................................5
c................................................................................................................................................6
d...............................................................................................................................................6
3. Contingency Planning..............................................................................................................7
a................................................................................................................................................7
4...................................................................................................................................................9
a................................................................................................................................................9
b...............................................................................................................................................9
c................................................................................................................................................9
d...............................................................................................................................................9
e..............................................................................................................................................10
f..............................................................................................................................................10
g.............................................................................................................................................10
Assessment Task 2.........................................................................................................................11
1.................................................................................................................................................11
a..............................................................................................................................................11
b.............................................................................................................................................11
c..............................................................................................................................................11
d.............................................................................................................................................11
e..............................................................................................................................................11
2. Review Variance....................................................................................................................12
a..............................................................................................................................................12
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b.............................................................................................................................................12
c..............................................................................................................................................12
d.............................................................................................................................................12
e..............................................................................................................................................12
3. Review and Evaluate Processes.............................................................................................13
a..............................................................................................................................................13
b.............................................................................................................................................13
c..............................................................................................................................................13
d.............................................................................................................................................13
e..............................................................................................................................................13
f..............................................................................................................................................13
g.............................................................................................................................................13
Reference.......................................................................................................................................15
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Assessment Task 1
1. Budget or Financial Plans
a.
The organization which has been taken from the case study is the Big Red Bicycle (BRB). This
organization is in Australia and the activity that has been conducted by this Big Red Bicycle is
the manufacturing activities, they manufacture bicycles in Bendigo, Victoria (Lee, et. al., 2013).
b.
The name of the team that has been considered here is a self-managed team. Self- managed
teams are the group of members who are empowered to taking their own decisions. These teams
carried out the supporting tasks in the organization. The members under these teams should be
self-driven, and self-managed. They are responsible for getting knowledge of what work to be
performed and the reason behind performing that work (Collins, 2012).
c.
The authority that is responsible for monitoring, and implementing team budgets or financial
plans in Big Red Bicycle are:
 Cash flow projections: CFO (John Black)
 Long-term plans/budgets: Operational General Manager (Stuart LaRoux)
 Operational plans: Production Manager (Charles Pierce)
 Short-term budgets/plans: Senior Accountant (Pat Roberts)
 Targets or key performance indicators for production, productivity, sales, expenditure,
income, and wastage: Sales General Manager (Sam Gellar) (Züerl, et. al., 2012).
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2. Making changes to Team Budgets or Financial Plans
a.
The budget that has been selected is the sales budget. The purpose of the selection of this budget
is that this is the backbone of BRB because this budget is the starting of all the other budgets.
The decision in preparation for other budgets has been based on the sales budget of every
company. This budget tells the resource allocation for the forecasted sales (Feng, et. al., 2015).
The main purpose of this budget is that it is associated with planning for resource maximum
utilization, and forecast the sales for the organization.
b.
i.
The budget that has been prepared is achievable by Big Red Bicycle because this budget has
been prepared for estimating sales of the products of the company throughout the year. If this
budget will be prepared by proper research of the needs of their customers, and the past sales and
the products will be prepared on this basis with maintaining good quality than this budget will be
achievable (Perdikaki, et. al., 2012).
ii.
Yes, the budget that has been prepared is accurate because it has been prepared by doing
intensive research that has been done by the research department of the past sales and of the
products that are required by the customers.
iii.
Yes, the budget plan is very comprehensive because it includes the setting department goals,
forecast production, and estimating the earnings (Zheng, and Sakellariou, 2013).
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c.
The improvement required in the sales budget is in the research of the past trends of sales in the
company. This area needs improvements because the sales in the past years have not been
forecasted accurately due to this the stock of the product of the manufactured goods have
remained in the big amount at the end of the year and it becomes dead stock and the reason is
that the satisfaction level of the consumer has been changed.
d.
For discussing anything about the sales budget in the organization. One would have to discuss
with Sam Gellar who is the sales general manager in BRB. Because he has the power to manage,
and take decisions regarding anything related to the sales budget (Collins, 2012).
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3. Contingency Planning
a.
i.
In every type of organization the future has been uncertain, due to this uncertainty there may
occur many situations in which the organization has to prepare a contingency plan for dealing
with the uncertain situation which may harm the profit of the organization. The consequences of
the occurring of uncertain event may be decreased in the sales as per forecasted and this will
result in dead stock of the company, and also the profitability will be harm (Shakhova, et. al.,
2012).
ii.
For identifying the steps that are required for making adjustments that have to be made due cope
up with the uncertainties are that firstly the organization has to ensure about the event that has
been occurred and the consequences it will put in the organization, and then a necessary plan will
be developed which will help in coping with the changes that have been incurred in the
organization (Anderson, 2016).
iii.
The adjustments that have been required in the budget plan are making the budget plan flexible
that will help in changing when and wherever required. The other changes in the budget plan will
be changing the sales that have been earlier forecasted based on the needs, and of the consumers,
then the production forecast will be changed on this basis, and in last according to the change in
sales and production forecast the revenue forecasted will also be altered (Gehman, et. al., 2013).
iv.
For achieving the original plan, to align with the adjustments the organization has to make more
advertisements for their products in the market for making the customer informed about their
decrease in their prices for releasing their dead stock. Try to decrease the cost of production for
coping with a decrease in the sales price, without being harmed the quality of the products can be
achieved by fully utilizing the available resources.
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v.
The outcome of the contingency plan that has been implemented by the happening of the event
which has not been expected by the organization is that the sales prices have been decreased of
the products but it can be cover-up by minimizing the production cost, company will start
increasing the advertisement of their products which will be able to attract more consumers
(Holten, and Brenner, S, 2015).
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4.
a.
The details that have been required by the organization for making the budget plan are details
about the past data of the sales, revenue earned, sales price, production of the goods. The record
that will show the sales data of few past years will help in taking the decision regarding the
future sales on the basis of the past sales, revenue, and sales prices will help in estimating the
revenue that the company may generate in the future and the sales prices that the company has to
fix which has been suitable for the customers in the past time (Ahimbisibwe, et. al., 2015).
b.
the necessary steps that have been required to decide on the collection of the required
information are that the company can arrange a meeting which will invite the required members
of the organization who know the past trends in the organization, this method is time-consuming.
So the company can also arrange an email to the required members who are related to keeping
the past data so that they can make available the data without wasting any time (Ruiz-Torres, et.
al., 2013).
c.
The communication methods that have been used which will easy in facilitating the plan to the
team members in BRB will be both formal and informal communication. The purpose of
choosing both communication methods is that both of them have different advantages of
communication. Formal communication will help the leader in letting the employees know what
the purpose that they have to achieve is, and information will help in solving any doubts that may
occur to the employee.
d.
For attaining any budget many responsibilities have to be fulfilled by the team members for
effectively implementing the budget plan. For effectively achieving the plan the leader will
divide the team into different parts and every team has different responsibilities that they have to
fulfill. Some of the responsibilities are of gathering information about past trends, collecting
information about the needs of the employees, employees demand product identification, etc
(Collins, 2012).
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e.
The leader will use immediate feedback for all the activities that the employees as and when they
are performing it. It will help in knowing the place where the implementation has not been
correctly adopting; this will help the employee in knowing the mistakes that they are doing. And
by doing this the employee will better understand their responsibilities, roles, and will be able to
fulfill the objective (Ruiz-Torres, et. al., 2013).
f.
The employees will be guided to perform their tasks by keeping in the finance that has been
decided earlier. All the activities have been allocated with some amount under which the
employees have to be in for completing the objective of the task. This will help in achieving the
goal effectively and efficiently. This will also help the employees in managing their role
regarding finance (Ahimbisibwe, et. al., 2015).
g.
The resource that has been used in this financial process has been the major part of human
resources, and technology. Because the human resources are the persons who will help 0in
achieving the resource of the organizations by the help of the system of organization in which
past data has been recorded (Züerl, et. al., 2012).
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Assessment Task 2
1.
a.
For monitoring the actual resources that have been incurred in the organization, the employees
have to measure the performance that has been done them, and after that the expenses that have
been incurred in every activity has to be evaluated, and after this the expenses that have been
allocated earlier has to check and this will help in monitoring them (Züerl, et. al., 2012)..
b.
The best process that has been used to monitor the cost will be to find out the variance. This can
be done by evaluating the actual process and then comparing it by the standards that have been
earlier fixed by the managers.
c.
The contingency plans can be monitored by using the continuous reviewing process. This will
help in continuously reviewing the environment and if anytime there will become changes in the
trends that will be immediately modified (Ruiz-Torres, et. al., 2013).
d.
The steps that have been useful for providing feedback is that the leader will have to try to
review the performance of the employees on regular basis, and when and where the leader will
identify any changes in the cost as per the standards, the leader will immediately provide
feedback to the employees and the employee will take action onto it.
e.
For identifying the variance that has been incurred in while performing will be identified by the
using the following steps, firstly the leader will provide proper training to the employees for let
them know how to work on spreadsheet, and then the data of the performance will be inserted in
the spreadsheet through which it will help in identifying if there will be some mistake
(Ahimbisibwe, et. al., 2015)..
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2. Review Variance
a.
The areas where the values will account for variance will be in sales volume, revenue, and
customer demand. And the areas where the account will overrun will be the cost of production,
products that have been produced, activity finance, and cost incurred in resource allocation, and
marketing expenses (Züerl, et. al., 2012).
b.
These accounts may include sales account, cost account, expenses account, advertising account,
accounting fees account, repairs & maintenance account, revenue account, and bank account
(Ruiz-Torres, et. al., 2013).
c.
The adjustments will be taken place in the sales price, cost of production, revenue incurred,
expenses account, etc. all these things have to make adjustments for contingency for attaining
financial objectives.
d.
Modification in the original plan has to make for the contingency plan preparation. A
contingency plan has also been very important for the organization as it will help in facing the
uncertainties and help in achieving the financial objectives (Ahimbisibwe, et. al., 2015).
e.
The procedure to handle the variance in the organization which has been related to the budget
plan which has been incurred due to implementation of contingency plan rather than the original
plan will be to take corrective steps to correct the variance that has been incurred.
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