Assessment 4.docx - Assessment 4 Implement budgets report...

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Assessment 4: Implement budgets & report on finances a) Firstly, you will have to plan for financial management. Explain three (3) different budgeting methods and techniques you could use to estimate the financial budget for the 2017 financial year! (Guide: 1 short paragraph for each) Incremental budgeting: is the traditional budgeting method whereby the budget is prepared by taking the current period's budget or actual performance as a base, with incremental amounts then being added for the new budget period. These incremental amounts will include adjustments for things such as inflation, or planned increases in sales prices and costs; Zero-based budgeting: the budgeting process starts from a base of zero, with no reference being made to the prior period's budget or actual performance. All of the budget headings, therefore, literally start with a balance of zero, rather than under incremental budgeting, when they all start with a balance at least equal to last year's budget or spend. Every department function is then reviewed comprehensively, with all expenditure requiring approval, rather than just the incremental expenditure requiring approval; Top-Down Method: using a top-down budgeting tool, you look at the total project budget and estimate the costs for each process. By examining each activity needed to complete the project, you can then assess which activities to decrease, if needed, to meet the budget. This approach tends to discourage participatory-style management. The project manager takes all the responsibility for decision making. b) Next, you will have to establish budgets and allocate funds for the 2017 financial year. After careful consideration of all the relevant factors, you have arrived to the following conclusions: all the sales items will increase by 10% each all the COGS items will increase by 5% according to the strategic directions from the management, the anticipated profit should be $25,000,000 it’s also clear, that due to contractual agreements, the wages will increase by $10,000,000 due to the expansion of the business, the rental expenses are going up by 25% Prepare the budget for the 2017 financial year considering all the available information above!
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  • '16
  • John
  • Revenue, Generally Accepted Accounting Principles, Coffee Purchase

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