Budgeting, Planning, and Strategic Decision-Making in Organizations

This report provides a comprehensive analysis of budgeting and its crucial role in organizational planning, strategies, and goal achievement. It delves into the budget development process, highlighting the significance of timing, stakeholder involvement, sign-off procedures, and the utilization of appropriate tools and systems. Key elements of a budget, including revenue, fixed costs, and variable costs, are thoroughly examined, along with the inclusion of indirect costs. The report reflects on cost structures, information gathering methods, and performance measurement techniques. It also considers the use of data analysis to support budgetary decisions. The document emphasizes the alignment of budgeting with broader organizational objectives and the importance of effective communication throughout the budgeting process, providing a holistic view of budgeting practices within a business organization. Desklib provides past papers and solved assignments for students.

BUDGTING AND
DECISION
Table of Contents

INTRODUCTION.................................................................................................................................4
MAIN BODY........................................................................................................................................4
Budget align to broader organisation planning, strategies and goal...................................................4
Budget development process.............................................................................................................5
Key elements of budget.....................................................................................................................7
Indirect cost included in budget.........................................................................................................8
Reflection on cost and cost structure.................................................................................................9
Information gathered to support the budget.....................................................................................10
Performance measure of budget.......................................................................................................11
Consideration over use of data analysis...........................................................................................11
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................13
INTRODUCTION
Budget is defined as analysing the future expenses and potential outflow and inflow
of financial liquidity and based on the assumptions and predictions this is about to prepare a

whole summary. The role of budgeting is very significant in context to the business entity as
this allow the company to prepare for the possible outflow of liquidity out of the business.
This report will discuss about the different elements and aspects associated with the budget in
context to the business organisation. Henceforth, report will emphasis over the fact that
budget align with the organisation planning, strategies and goal. The budget development
process will also discuss under this project. Key elements part of the budget will also discuss
under this project. Reflection over the cost and cost structure will also done under this
project. Furthermore, different assumptions made while preparing the budget will also
discuss under this project. The process followed to gather the information will also discuss
under the budget. Performance measurement process against the budget will also discuss
under this project. The role of the project is to discuss about the different areas and elements
part of the budgetary requirements and its roles.
MAIN BODY
Budget align to broader organisation planning, strategies and goal
Budget is a process that is all about interpreting different areas and factors part of the
organisation. The role of budget is about to interpret the possible and potential expenses that
company would incur and also about to interpret the possible inflow in the organisation.
Planning of company is fundamentally influenced with the financial resources availability,
inflow at a possible level and the outflow of the organisation in the respective financial year.
Role of budget is very significant in delivering all types of planning, strategies and goal of
the business entity. Planning of company related to each functional activity is based on the
budgeted valued identified under the process of budget. The budget is directly associated and
linked up with the organisation (Agostini, Cella and Favero, 2021). The planning, strategies
and goals of company is certainly influenced with the organisation to sustain a good
operational and functional flow at the business entity. The organisation planning is all based
on the availability of the financial resources with the business entity. Planning of company
cover up all areas and aspects that can favour the business organisation to approach the
business planning in the best way possible. The role of organisation planning is very
significant in respect to the business organisation. For example the financial resources
estimated to require in budget would further affect the planning phase. Company plan all iyts
operations and functions based on the financial resources depicted in budget.

The strategic formulation of the business entity is all about analysing the requirements
of the business organisation. Strategic formulation is all about interpreting the overall needs
and requirements of the business enterprises and on the basis of the company need and
demand this is about to provide the right strategic choice that can favour the entity to meet up
its business objectives (Bayazovna, 2020). Strategic choices also involve analysing the
business resources of company. This is important for the business entity that it considers the
availability of financial resources that can match up with the needs and requirements of the
business organisation. Financial resources are highly involved in influencing the business
decision making and strategic implementation practice. This is essential for the business unit
to interpret the possible expenditure involve in implementing the strategic choice at the
organisation. Budgeting techniques favour the company to analysis and interpret the possible
expenditure and resources requirements in order to implement the respective strategic choice.
Budget also influences the goal setting. This is essential for the company to provide the right
and suitable budget to channelize business operations in the best way possible. This is
significant part of the goal setting as it is set on the basis of the potential ability of the
strategic choices adopted by the company. All this is done based on the budgetary techniques
utilise by the company.
Budget development process
Budget development process is based on different areas and elements associated with
the entire process. The budget development practice involves different stages and directions
that can favour the business organisation to deliver the best level of budget on the basis of
needs and requirements of the business organisation.
Timing and time frame
Timing of the budget preparation is very essential. The timing of the budget is all
about the period or the time on which the respective budget is prepared. This is an obvious
fact that the inflation certainly increases as the time passes. The budget prepared is based on
the estimated cost that would also certainly increases with the time passes. This is an obvious
fact that the period of time at which the budget is prepared would certainly increase the level
of expected need and financial requirements of the business entity. Time frame on the other
hand is very significant part of budgeting (Begmadjon, 2020). This is essential for the budget
to provide significant resources of finances based on the time frame. The more the duration is
of the project the more the budget will increase. The time frame is very significant in nature

when it comes to prepare a budget in the organisation. Time frame is an essential part of the
budgeting practice followed by the organisation. For example if the time frame increases then
the budget will also increase. Also the timing influence in such a way that for example all
cost are finalised based on the time at which budget is prepared.
Key stakeholder involved
The stakeholder involvement is an important part of the budgeting technique.
Stakeholder group are the one that are certainly associated with the project about which
budget is prepared. Involvement of the stakeholder with the project is also a factor that
certainly influenced with the budgetary practice (Bergmann and et.al., 2020). The stakeholder
involvement is very significant in nature that affects the entire budgetary practice of the
business organisation. Stakeholder involvement significantly affects the entire budgeting
practices of the business organisation.
Signoff
The signoff is the important part of the budgeting practice. This is an element that
certainly affects the entire budgetary practice. This factor or element that motivates and
guides the business organisation to influence the budget. It is essential for the organisation to
affect the budgetary practice. Signoff is the time that favours the business organisation to
certainly influence the budget.
Tools and systems
The tools and systems are the one that certainly affect the budget. This is important
part of the budgetary system. The level of tools and systems company use it would certainly
increase the budget of the business organisation. The tools and systems are always a part of
any project or operation conduct by the business organisation. The tools and systems
certainly affect over the budgetary practice adopted by the business organisation (Birskyte,
2019). On the basis of the requirements of the project company and management select the
tools that can cope up with the need and requirements of the project. On the basis of the tools
adopted the budget is prepared based on the estimated cost require to acquire such a tools.
The more advanced systems are adopted the more cost it will consume and the more budget
will be required to consume such a tools.
Communication

Communication is an important part of the budget preparation process. The budget is
prepared by communicating with different stakeholder such as supplier about the estimated
cost of the project. On the basis of the level of cost communicated by the stakeholder budget
is prepared (Guo, Geng and Wen, 2021). Communication is a weapon used in the budgetary
process. Once the budget is prepared the stakeholder group communicated with the respective
authority about the budget and its associated requirements. For example company
communicate about the budget with all the key stakeholder group such as suppliers,
employees, team and all other stakeholder to clarify about the available resources to deliver
the certain function.
The above mentioned process is the different strategies of the budget preparation.
This is important that the organisation prepare the budget in the best way possible.
Key elements of budget
Budget is a cumulative Performa of different elements such as cost and revenue. The
basic structure of budget predict the value of revenue company will entertain and also depict
the level of expenses company will incurred in order to approach the process in the best way
possible. All different elements associated with the budget will be depicted in the following
ways.
Revenue
Revenue is an inflow of the financial resources in the business. Revenue is a
fundamental elements aspects associated with the budget. Revenue is net inflow of the
budgeting practice. Every time compare prepare budget this also mentioned or involve the
inflow that is expected in the organisation (Ibrahim, Yusoff and Koling, 2018). The level of
revenue business organisation earn is certainly influenced the budgetary practices adopted by
the business organisation. Revenue is an important part of the budget preparation.
Fixed cost
Fixed cost is a cost that remains fixed in the business irrespective of the level of
activities, operations and functions areas of the business entity. There fixed cost is the one
that are fixed in number. In context to the budget preparation the business organisation.
Budget contain a section in which fixed cost are consumed. This is a cost that remains fixed
irrespective of the level of activity or production business organisation deliver. When it
comes to preparing budget organisation analysis the level of fixed cost involve in the

operations. Fixed cost contains fixed value or amount that influences the budget in a fixed
number (Ifeanyichukwu, 2021). Every year company face the fixed number of financial
burden in term of fixed cost. The fixed cost remains fixed in nature that indicates the business
organisation to sustain a good flow. The budget mentioned involves fixed cost examples like
depreciation, salary, rent and interest expense. This is a cost that would remain unchanged
throughout the financial year.
Variable cost
The variable cost is a nature of cost that does not remain the same. These changes
based on the level of operation and functions perform in the business organisation. Company
bear a different level of variable in the organisation on the basis of the level of financial
activity perform by the business organisation (Janani, Chakravarthy and Raj, 2018). This is
important that the organisation estimates the variable cost incurred and based on the fact
company prepare the budget by anticipating the variable cost expectedly incurred by the
business entity. Budget of company contain a section that involve variable in nature.
The above stated cost and revenue are the different side of the budget. A professional
budget prepare by the business entity contain all the three areas revenue and the other two is
fixed cost and the variable cost. This is important that the financial professionals anticipate
the cost and revenue in the same way that the best level of budget could been prepare by the
business organisation (Kamaruzzaman and et.al., 2018). The variable cost included in the
budget is raw material, packaging, wages and commission, stationary and utilities. All these
are the cost that does not offer the same financial burden that allows the organisation to bear
a different cost.
Indirect cost included in budget
Indirect cost is a nature of cost that is not directly involved in the operation process.
This is a cost that does not contribute in delivering the final unit of production. This is a cost
that is incurred to deliver the usual operation and functions areas of the company. This is
done over maintaining the infrastructure and delivers the other operations and functions of
the business organisation. The role of indirect cost is not in delivering a straight production or
trading functions of the business. There are many costs like rent, salaries, utilities, interest
expenses, stationary and other such cost that is associated with the indirect cost.

Budget is a set of activities that reflect about the different cost that business
organisation will incurred in order to approach the functional and operations of the
organisation. Indirect cost does not contribute directly in the operation and functional areas of
the business organisation. Budgetary function also involves certain indirect cost that business
entity incurred every financial year. These are the cost mandatory to channelize operations
and functional areas of the organisation. The role of indirect cost is very essential as it
directly take a part in channelizing business operations. Cost allocation is certainly influenced
with the overall cost incurred. Every year the business entity or organization involves certain
indirect nature of cost that can favour the business operations channelizes by the business
unit. This make it more significant for the business unit to anticipate the expected indirect
cost and incurred it for delivering the respective business operations. On the basis of the
anticipation done the indirect cost are assume and prepare the budget accordingly. The role of
indirect cost is very crucial in the normal business operations and functions and this make it
more significant that the business origination anticipate the expected indirect cost incurred
every single financial year.
Reflection on cost and cost structure
The cost is a fundamental basis behind preparing the budget for the respective
financial year. The cost is a basis of preparing the budget each single financial year. Cost
involved under the budget is fixed and variable in nature. Both the types of cost that is
included while preparing the budget for the respective financial year. The fixed cost remains
the same irrespective of the level of operations and activities business entity channelizes. The
variable cost do change and influence in respect and comparison to the level of operations
and functions perform by the business organisation (Pratiwi, 2019). The cost is certainly
depicted the different areas and elements associated with the budget preparation. Cost
structure on the other hand depicted the direct and indirect cost in nature,. Direct cost is a
nature of cost that in directly associated with the business organisation. Indirect cost is a
nature of cost that does not contribute directly in producing the final units to deliver it to the
end customers in market. When it comes to preparing the budget this is essential that the
business unit anticipate the different fixed and variable nature of cost that company will
incurred under the respective financial year. Also this is important for the business unit to
anticipate the direct and indirect cost incurred for the respective financial year. This make it
more significant for the business unit to assume the level of cost incurred in against to deliver
the final operations and functions of the organisation,.

Company keep a budget that can meet up all the types of cost requirements of the
business organisation. This is essential for the business unit to analysis the different cost that
can contribute in the overall functional and business areas. Budget is a comprises elements or
areas associated with the various cost direct and indirect in nature that can support the
company rto deliver the final business operations of company. The business unit also
increases a certain level of cost that can allow the business unit to channelizes best level of
operation and functional directions.
Information gathered to support the budget
Information becomes the sole basis of delivering every single operational and
functional direction associated with the business unit. The information gathered while
preparing the budget with support of various sources such as previous year financial records.
This is essential that the finance professionals prepare budget on the basis of the previous
year records that can certainly allow the company to depict about various cost and other such
aspects that can favour the business unit to prepare the best level of budget possible. Previous
year financial records the main source of preparing the budget for the business unit (Reyes
and et.al., 2017). The other element such as business reports to anticipate the level of price
rise company can expectedly entertain. This is very important to anticipate the level of price
rise business organisation entertains. This is very certain that the company will have to bear
more cost for the same level of operation and function as compare to the previous financial
year. Inflation become the sole reason of the price hike entertain by the business organisation.
This is also included whole preparing the budget in the organisation that company anticipate
the cost and included it in the budget. For example information related to interest and all
other would certainly influenced the budgeted cost.
Along with the source above internet, literature and other such academic sources are
also explored. Company always aim to innovate its practices so that best level of financial
interpretation could be done to prepare the best level of budget in the organisation. All these
sources contribute for the business unit to prepare the best level of budget possible in the
organisation. Sources related to information make it more certain for the business unit to
anticipate the best level of recommendations over the expected cost incurred to prepare the
best level of budget in the organisation (Schoenfeld, 2019). The basic characteristic of the
different sources explored indicate about the ways to assume the expected cost incurred for
the respective financial year. The cost are collected based on previous years records and the
anticipate future cost incurred by the business entity to deliver the budget. The different

sources company explore would support and drive the business organisation to prepare the
best suitable budget that can meet up all its needs and requirements regarding operations and
functional direction of the organisation.
Performance measure of budget
Performance measure is a process that is about to measure the overall performance of
the organisation. Business management analysis the performance of the budget on the basis
of comparing it with the actual figures incurred by the business organisation. Performance
measure of budget is directly associated with the comparison in between the actual and
anticipated values of the business organisation. Performance measure of budget is essential as
it provide a future strategic direction for preparing the best level of budget in the
organisation. The performance of budget is measure with support of comparative assessment
between the expected values that included in budget and the actual figure included in the
financial statements and records of the business organisation.
Performance measure in budget is based on the fact that company require to analysis
the differences between the values mentioned in budget and the actual figure included under
the budget. The performance of the organisation is very important. This is important for the
business unit to anticipate the actual values that require incurring by the business unit.
Performance of budget is directly monitored with support of the actual values. On the basis of
the performance the modification are also done in the next year values. This is essential for
the budgetary practice that the business entity delivers the potential budgetary practice. For
example company every year compare the existing budget with the previous years. This allow
the business entity to understand the success of the budget. Actual figures are also analysed to
measure the success of the budget.
Consideration over use of data analysis
Data analysis is a practice that is about to analysis and interprets the data and values
business organisation will incurred. This is about to analysis the data and values of the
business organisation to ascertain the cost. The data analysis allows the business entity and
professionals to anticipate the cost incurred to formulate the best level of budget in the
organisation. Use of data analysis is significant in respect to the organisation that it is
essential to anticipate the expected cost incurred to bear the cost. Consideration is done on the
basis of the expected cost incurred to approach the operations and functions areas associated
with the business organisation.

CONCLUSION
Budget is all about anticipated the expected cost incurred to approach the business
operations. This is a cumulative record related to the expected cost incurred by the business
unit. The role of budget is significant in respect to the business organisation that this is about
to analysis the expected cost and the actual values company consider in the respective
financial year. The cost in the budget is segregated into the fixed cost and the variable nature
of cost. This is essential to segregate the expected cost incurred in the budget.

REFERENCES
Books and Journals
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