Week 12- Budgeting - Week 12- Budgeting Budget = formal...

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Week 12- Budgeting Budget = formal written summary (statement) of manager’s plan for a specified time period Important for controlling and evaluating performance Benefits of budgeting Requires all level of management to plan ahead Provides definite financial objective for all levels of responsibility Creates an early warning system for potential problems Facilitates coordination of activities Results in greater management awareness of operations and external activity Contributes to positive behaviour patterns throughout entity Essentials of effective budgeting Clearly defined areas of authority and responsibility Realistic goals Acceptance by all levels of management Participation by managers in setting budgets Review of differences between actual and expected results The budgeting process Development of next year budget begins before end of current year Budgeting starts with a sales forecast that shows potential sales for the industry which includes: - General econo mic conditions/industry trends - Market rese arch studies - Anticipating a dvertising and promotion - Previous m arket share - Changes: prices, new products and technological develop m e nts
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Week 12- Budgeting - Week 12- Budgeting Budget = formal...

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