Financial Budget Types: Master, Operating, and Financial Budgets

This report examines various financial budget types that can be utilized by the ACA Travel Agency, including master, operating, and financial budgets, detailing their functions and benefits. It highlights the importance of stakeholder engagement in budget planning and provides recommendations for an effective budgeting process, including setting objectives, developing strategies, and establishing measurable targets. The report also discusses communication methods, the benefits and shortcomings of draft budgets, and the importance of monitoring and reviewing budgets regularly. Furthermore, it includes an action plan outlining steps for budget reformulation, communication, and employee awareness. The analysis references Apple's budgeting practices and provides insights into the application of different budget types in a business context.

1
Financial Budget

2
Types of Budgets
ACA travel agency may use Master budget because it will help the management and the
stakeholders of the organization to get an overview of the company’s sales, assets, operating
expenses and many more.
The second form of budget which can be used by the company is Operating budget.
Operating budget will help the management department of the ACA Travel agency to check
the reports of the organization monthly or weekly and they can also whether any
overspending is done or not (Griffin, 2013).
The last type of budget which can be used by the agency is the Financial budget. The
financial budget of the organization will help the management and the stakeholders of the
company to have an overview of the financial health of the company. It will help the
managers to understand the revenues and the expenses that are being incurred by the
company.
Sources of Information
A company like Apple releases its Annual report quarterly. It creates its budget following the
rule of Operational budget. This means that the company is using Operational budget
technique to create a budget (Apple, 2017). Other sources of Information have been retrieved
from various books and journals which has been mentioned in the reference list.
The internal mode of communication which can be used by the company ACA Travel
Agency is through electronic techniques or through printed media like journals. The company
can also share the budget to its stakeholders through verbal communication.

3
The annual report of the company can be posted in the company’s website so that all the
stakeholders and customers can get access to the budget of the company. This method of
communication is known as the External method of communication.
Contribution in Master Budget by stakeholders
It is very important to engage the stakeholders of a company in making budget decisions.
While creating a master budget plan for the company the stakeholders can contribute in a
large way. The stakeholders of a company have a knowledge on the customer’s expectations.
While formulating the budget an expenditure for better services of the agency like
experienced tour guides, hotels etc. should be estimated.
Recommendations
Budgeting means planning and coordinating the expenses of the organization while carrying
out various activities. The budgeting process that should be followed by the management
department of any organization should have 4 steps. The steps are Objectives, Strategies,
Measures and Targets (Hansen, 2011).
While creating a budget first the management department should set up an objective. The
objective should be based on how much the company wants to spend on per customer. The
next step which has to be followed by the management is developing strategies. According to
Schäffer (2013), development of strategies or action planning involve increase in the offering
of the products to the customers, a budget should also be made for the promotional and
marketing strategies of the organization.
Budgets should be made on weekly or monthly basis. The top level management authorities
of the organization should weekly or monthly evaluate that whether the company is
successful in receiving the targets that has been set or not. The last step of the budgeting
process which should be followed by the company is setting up of targets which is

4
quantifiable and time based. The targets should be mainly on the basis of the sales or the
revenue generation of the product.
A correct method of budgeting can help the stakeholders in a lot of way. With efficient
budgeting the organization can achieve its goal in a more efficient way. Transparent
budgeting may help the stakeholders of the organization that how much profit would be made
in the end of the current financial year. An efficient budgeting system also helps to achieve
the sales target of the organization more efficiently and thus it helps the organization to
generate more profit which in turn helps the stakeholders of the organization.
Benefits and shortcomings
A draft budget is that type of budget which is in the stage of working. One of the important
benefit of draft budget is the organization can change the budget according to its need.
Though it has few benefits but the most important of shortcoming of a draft budget is too
much changes in the formulation of the budget may create confusion and it can reduce the
efficiency of the budget (Eldenburg, 2016). According to the organization chart mentioned a
draft budget can be discussed with the owner of the business.
Collaborative method of discussions should take place among the budget formulator and the
owner of the business. According to this method idea can be exchanged between them and if
any changes required it can be done accordingly.
Communication methods
Once the budget is finalized the budget should be communicated with all the employee of the
organizations. Since, budget helps to identify the goals of the company it is very important to
communicate the budget with the employees of the organization because then it would be
easier for them to achieve the goal.

5
Monitor and Review
Individual departmental budget like Administration, Inventory and many others should be
looked after very keenly. The budget made for the administration department should be
looked after on a monthly basis, the purchases of any equipment should be done according to
the need.
The master budget should be evaluated by the top management authorities and it should be
seen whether the targets are being achieved or not. Budgets should be monitored and
employee should be motivated to achieve it (Eldenburg, et al., 2016).
The budgets should be reviewed on monthly basis. It should be seen whether the organization
is achieving its target on monthly basis or not. Regularity in evaluation reduces the
occurrence of any discrepancies.
Action plan
Action Description Department
responsible
Resources required Outcome
Re formulation of
the budget if the
previous one is not
effective enough
Finance department
and the top level
management
department is
responsible
Skilled employees,
analytics should be
hired so that they
can predict a proper
estimation.
Reformulated budget
is the outcome
which will be more
effective for the
organization.
Awareness on the
newly formed
budget
Deputy ministers
and senior
management
Meetings should be
conducted where the
awareness of the
newly formed
budget should be
The benefits and the
requirements of the
budget are discussed
among the
employees.

6
discussed.