Budgeting Is The Main Goal For Profit Planning

Planning is a function that is employed by every organization in projecting the future outcome of the firm. Successful firms achieve their goals through the use of different types of budgets. These budgets include, production budget, sales budget, labor budget and expenses budget. These budgets also show the targets that should be achieved by the firm within the budgeted time plan.

The budgets process could help to spread resoursces that increase the skill to get best outcome.

Careful planning is required to guide all parts of the organization towards its strategic long-term and short-term objectives. Anthony & Govindarajan (2000) saw strategic planning as being focused on several years, contrasted to budgeting that focuses on a single year and so a budget is a one-year slice of the organization’s strategic plan. The budget prepared for planning purposes, as part of the strategic planning process, is the quantitative plan of management’s belief of what the business’s costs and revenues will be over a specific future period (Davies & Boczko, 2005). According to Atrill & McLaney (2002), a budget’s role is

Sales Budget – refers to the units of product the business expects to sell times the sales price per unit. In order to plan the sales budget, most businesses use the information provided by the sales people and forecast the future sales.

A budget is an instrument used to help managers ensure that the resources used effectively and proficiently toward the goals of an organization. A budget projection can be made on a yearly base depending on previous year or existing one. They can further be broken down quarterly or monthly depending on it use. Generating a budget is complex undertaking, and for a budget to be effective the organization ought to follow it strictly. However, no matter how closely a business follows their guidelines there will always be some form of variances. The organization should expect a few variances and be able to work these discrepancies in any budget

Budget is a planned outcome of the future - defined by your plan that your business wants to achieve.

A budget is a plan which predicts how much a company makes in revenues and how much it is going to pay in expenses and so predicts a profit or loss. A budget is can be prepared whenever a company wants two and for however long a period of time it wants to prepare it for. Companies and people would budget in order to avoid overspending and even if this does happen as it will predict how much money will be needed then the person/ business can arrange for it by getting an overdraft facility or

A budget plan is the most effective way to keep the business and its finances on track. It gives you the opportunity to review the business’ performance and any factors that are affecting or may affect your business. Also to manage your money more effectively, allocate appropriate resources, monitor performance, meet planned objectives and plan for the future.

According to Shim, Siegel, Shim 2012, budgets are an efficient method of allocating financial resources to achieve strategic goals. For companies to compete in the global market it is essential to monitor and control spending in order to see progress toward reaching their goals. Budgets help to control spending, estimate cash flow and profits, while striving to meet goals.

The concept is illustrated in Figure 1.The profit plan and second-year forecast are used to control the business and evaluated mangers in respective of “planning, forecasts, and achievement”. Under these plans, managers can prompt find problems by reviewing the budget on three occasions, comparing the variances between real number and estimated number, and correcting the errors in order to achieve the long term target. Managers can perceive and understand how and why their estimates have changed over time; consequently, they will control themselves to meet their long-term targets on their own initiative.

As a first step in the budget process, sales forecasting allows for other budgets to be planned on sales activities. Purchases and production, for example, depend on the forecasted sales and subsequent inventory levels to be managed. The operating expenses are then budgeted as a result of the sales budget and expected costs of purchasing and production (materials, labor, manufacturing) as a measure of Cost of Good's Sold.

Budget is a comprehensive business plan for procuring and appropriating a firm’s financial resources over a specified time period.

The company has to be able judge its spending performance. Does not matter what type of company it is, the ability to measure performance using budgets is an important process in any business organisation. Planning helps to understand where business is at present and where it is going to be in the future. Company’s planning process has to involve different developing objectives and prepare

Budgeting is the systematic method of allocating financial, physical, and human resources to achieve an organization’s strategic goals. Budgets are utilized by for-profit and non-profit organizations to monitor the progress towards the goals, assist in the control of spending, and help predict cash flow for the organization.

Budget and budgetary control practices are undeniably indispensable as organizations routinely go about their business activities and operations. These organizations are constantly on the alert on how actual levels of performance agree with planned or budgeted performance. A budget expresses a plan in monetary terms. It is prepared and approved prior to a particular budgeted period and explicitly may show the income, expenditure and the capital to be employed by organizations in achieving their goals and objectives.