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Budgeting and Forecasting
Budgeting and forecasting are business processes essential to a company’s operations. Budgeting involves planning for revenues and expenses. Forecasting is a method of predicting trends based on historical and current events.
1,416 Questions
How do you improve budget performance?
Six steps to improve budget performance-
1.Automate.Are you getting the most out of your current tools? What are your current tools? In most organizations, they are spreadsheets, and the majority of Excel users take advantage of less than 5% of the package's features. It is worthwhile to sit down with an "Excel wizard" to walk through your budgeting and forecasting spreadsheets. Small changes can make a big difference in usability, accuracy and speed. Excel, Access and other end-user applications are powerful tools when used correctly and with the appropriate controls. Workflow, thresholding and data management tools can improve consistency and highlight focus areas for additional attention, but most organizations fail to use them effectively. Devote some time to improving templates, and consider every user receiving the benefits. Data is king when it comes to budgeting, but it is not an end goal in itself. Do not spend your time pulling together data and reconciling it -- spend your time building plans from it.
2.Focus on material items.Sure, it's fun to count paper clips, laptops and data plan costs at the employee level, but in the grand scheme of the enterprise budget, counting these items is a waste of time and unlikely to drive great improvement in business results. Instead, utilize driver-based metrics wherever you can in these areas (e.g., budget laptops based on employee counts rather than calculating them separately). Driver-based metrics are faster, more consistent and easier, plus they allow you to focus on areas where insight can truly improve business performance. That is the point of budgeting, after all.
3.Be honest.Many organizations budget at the department and line item levels, rolling up forecasts into summary reports and presenting them to management, only to be told that budgets have already been set and plans need to "deliver" certain contributions, regardless of the bottoms-up analysis. This is not to say that department heads should "Occupy Budget Street" in protest, but rather that both groups should consider the end product and needs from the outset and tailor the approach and workload to the reality that exists. Communication around expectations and end products will save time and effort, and result in happier budgeters all around.
4.Make time to do it right.Budgeting and setting plans -- and, most important, thinking about budget decisions and future direction -- is incredibly valuable if it is done right. If you are on the hook to budget for your department, sector, or business unit, block your calendar, close your door and think about what you are doing. Business planning is difficult to accomplish in fits and spurts. It is necessary to build a mental picture of how you see the business playing out, and then talk to others to get the full picture. For example, if the sales department assumes 20% growth in new revenue but does not share that goal, IT cannot envision or deliver the required systems.
5.Iterate.Budgets are often thrown together in the eleventh hour to meet artificial deadlines. No one likes this approach, and it does not achieve much in the end. An ideal budgeting process narrows broad goals into specific business plans and metrics through iterative group discussion, but only after initial metrics and numbers are generated by the groups responsible for each area. In a transformed organization, continually rolling forecasts update with actuals as the business proceeds against plan. In many successful organizations, initial budgets are reviewed during retreats or other gatherings, promoting dialogue and thinking, and providing a narrative to support the numbers. Three individuals will think three different things when viewing the same spreadsheet, so why not talk about it?
6.Review and improve.Set the meeting now to scrutinize this year's process and think through improvements for next year while the current pain points are fresh in your mind. Include reviews of both the process and enabling technology. Long term, consider upgrading to an enterprise-grade system with automated workflow and built-in controls.
Placing focus on planning and budgeting activities is a critical part of keeping financial processes healthy as businesses evolve. Finance transformation is best completed as a series of small steps, and this is one step that you can take now. In addition to making small but key changes to this year's process using the tips outlined above, open your calendar now and book time in January to stop, think and improve. The budget process does not have to be an annual pain point. Fix it.
From-VARUN MALHOTRA
D.A.V COLLEGE JALANDHAR
ph-9779735358
What is the difference between a cash budget and an income statement?
Income Statement is a financial statement which shows all the income and expenses of company, while cash statement shows the receipts and payments of company.
In cash based accounting system cash statement is also work as a income statement as everything is dealt on cash bases but in accrual accounting tracking of receipts and payments and income and expense is a separate tasks.
Companys undertake a "budget" review at least monthly but certainly quarterly. This is to see if the budget is being followed, identify any areas where the budget is facing issues and put in place measure to fix shortfall. It is good practice to review on a regular basis so that any unforeseen issue are responded to in a timely manner
Describe 5 ways in which globalization has affected a business in their effoet to create a competitive advantage.
Factory overhead should be allocated on the basis of?
factory overhead should be allocated on basis of their apportiomen
In 1998-99 CIMA funded a research project entitled "Accounting for environmentally sustainable profits". This investigated how businesses could develop more complete accounting systems that acknowledged the most significant environmental effects of their activities. The first part of the project developed a method that is now being used by firms such as Marks and Spencer, Bulmers and Wessex Water. The second part turned the experience into a CIMAbook on the subject . Leading businesses acknowledge that their long-term future is linked to their ability to minimise the environmental damage caused by their activities. What once were external costs can quickly become internalised as a result of regulations such as landfill tax, the climate-change levy and aggregates taxes. EU member states are committed to increasing their use of such policy instruments. Consequently, an awareness of a business's exposure to environmental risks can help managers in their strategic planning. When reported, environmental accounting can also help a business to boost its reputation, attract the best employees and differentiate itself from less proactive competitors. Without proper systems to account for such costs, it is unlikely that companies can meet the future expectations of their customers, investors and the requirements of an increasingly stringent regulatory regime. The method developed by the project aims to calculate the sustainability cost of a business--ie, the notional cost that it would incur to restore or prevent the major environmental damage caused by its activities over an accounting period. Key stages in the process include: * the identification of the most significant environmental consequences of the organisation's business operations; * the estimation of what a sustainable level of emissions/impacts may be--ie, the determination of relevant sustainability targets; * the valuation of these impacts; * the development of accounts incorporating these values and the subsequent estimation of the company's sustainability cost and environmentally sustainable profits. The key innovation is the linking of this monetarised environmental data to the financial accounts to arrive at a figure for what could be considered as the company's environmentally sustainable profits. The headings of the proforma accounts developed through the project (see "Proforma Consolidated Environmental Accounts for Company PLC for the Period to 30 April 2002", right) reflect the recommendations issued in the latest version of the Global Reporting Initiative guidelines. Only first-level impacts--ie, those for which the business is directly responsible and has the greatest ability to control--plus second-level impacts resulting from its fuel consumption have been taken into account. Sustainability targets have been determined by referring to the latest scientific thinking on the various impacts. For example, when estimating the sustainability target for carbon emissions, a 60 per cent reduction target has been used. Both the Royal Commission on Environmental Pollution and the Intergovernmental Panel on Climate Change have suggested that cuts of this scale are required to prevent dangerous climate changes. Targets for non-carbon-based transport emissions have been set according to estimates aimed at bringing urban air quality within guidelines set by the World Health Organisation. In reality, no one really knows what a sustainable level of emissions may be, so you must take a fairly pragmatic approach when setting targets. Once the targets have been set, individual sustainability cost estimates are made on the basis of avoidance or restoration costs--ie, on what the business would spend either to prevent the damage in the first place or to restore the harm caused by its activities if they are unavoidable. Costs, as far as possible, are based on "real" or market-based prices. For example, emissions of carbon dioxide, nitrogen oxides and sulphur dioxide from electricity production or usage can be largely avoided by switching to some form of renewable energy, so the appropriate avoidance cost to use would be any resulting premium charged. Transport-related emissions of hydrocarbons and particulates from large vehicles can be reduced by about 90 per cent by the use of catalytic conversion and filter systems. These again provide an example of a market-based avoidance cost. Other valuations can be harder to specify. The main purpose of the estimation is to illustrate the cost of achieving a given improvement in environmental quality based on the available technology. In this "pure" form, the estimate will alter for only two reasons: changes in absolute emissions or changes in abatement technology (and the price of that technology). The sustainability cost can therefore provide a powerful indicator of a company's progress towards--or away from--environmental sustainability. Environmental cost accounting is still evolving as companies start experimenting with the method. After all, it has taken us centuries to develop the current, and still dynamic, framework of financial reporting standards. But the broad approach--ie, identifying where a business is in terms of its environmental impact, setting sustainability targets and determining the most cost-effective method of closing that "sustainability gap"--is likely to remain the same. See article here: http://www.bnet.com/ Title: "Clean sheet: why would a company want to go to all the trouble of producing external environmental cost accounts? Rupert Howes states the business case and explains the basic method"
Difference between tally 7.2 tally 9?
1.8 Tally 7.2 is older version and Tally 9 is NEW.. Just Like your Old Underwear and New one..lol
What is the budget review process?
it is an evaluation process. it compares the actual performance of the business against the projected performance of the business.
What qualities do you need to supervise staff?
1. self confidence
2. knowledge your work and theirs.
3. appreciation of their contribution.
4.level headedness.
5. tolerance.
6.self discipline
7.leave the rest to God.
What happens Cost driver activity level increases within the relevant range?
total fixed costs remain unchanged
Beyond budgeting (BB) is a specific idea which regards the abolition of the traditional budget process as the trigger for improving management control within organizations by a fundamental re-examination of how they might be managed better.
What are the Techniques used for control of labor cost?
how cost planning techniques are used to control the costs of a construction project
6 is 30 divided by 5, so we can simplify 6 over 30 into 1 over 5.
Now what is 1 / 5?
Let's start by dividing 10 by 5. 10 / 5 = 2.
Because 10 is 10 times the value of 1, we divide 2 by 10. We get 0.2 from this question.
Therefore, 6 over 30 in decimal form is 0.2
Kaizen costing is an extension of target costing, in which the focus is on cost reduction.
Kaizen is the Japanese word for continuous improvement; therefore kaizen costing refers to continuous improvement during manufacturing.
There are 2 sub-cycles in this approach. The first one is the kaizen/ continuous improvement cycle, whereby annual goals are established as part of the planning process. The ultimate goal is cost reduction, and actions and strategies are planned in order to achieve the goal. This could be in the form of more streamlined processes, more efficient use of materials, etc. As with value engineering (see here for more explanation), the costs of existing products/processes are reduced by reducing non value-added costs (which do not add value to the product from the customer's viewpoint).
In time, workers become more familiar in the new strategies and actions and the cost reduction is "locked in".
This is taken further in the second sub-cycle, the maintenance cycle, which maintains the cost reduction at the new standard/level.
But that's not the end of the story. Remember that kaizenis all about continuous improvement, so we go back to the kaizen cycle in which further cost reductions are planned and implemented, via more efficient and cost-saving strategies. These improvements are again "locked in" via the maintenance cycle.
This goes on and on throughout the life cycle of product/service, or indeed as long as manufacturing processes are continued.
Note: eventhough we've discussed the use of kaizen in manufacturing processes, any small business can utilize it. It is a cost reduction mindset which is continuous - the goal posts are constantly moving further.
For example, in a business, think of what can be cut out or reduced. Are there are ways to be more efficient? Can time be reduced in any actions taken? Can a process be made to achieve more than 1 objective? Can the work of a staff be structured in such a way to help him to do more without much additional effort?
What is the average rent for a small business?
Rent is averaged around 2 USD per square foot. So averagely the 500 sq ft building will be 1000 dollars a month. Give or take, it will depend on the buildings location and many more factors which may change how much the rent will be.
Difference between direct cost and indirect cost?
direct cost has direct relation with product manufacturing while indirect cost not and not identifiable with cost as well.
What is overhead costing sheet in sap?
Costing sheets in SAP determine how cost estimates calculate overhead costs.
What is the most dangerous Sexually Transmitted Infection?
It is HIV-AIDS. Human immuno deficiency virus;Acquired immuno deficiency syndrome.
Making a budget of ones finances involves determining your bills every month and what amount of money that you need to pay out of your finances. Then making a list of what you are going to pay and what you have left to use for food, clothing, and fun.
What are the Characteristics of a good budget?
careful planning, practicality, flexibility, and accessibility
