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Unformatted text preview: t of time that it happens, the more you need to reevaluate your budget. Download free ebooks at bookboon.com
44 Budgeting Your Project(s) Managing Budgets 8. Budgeting Your Project(s)
When you have to create a budget, there are several steps to doing it well. Some of these steps might be
prescribed by your organization’s Finance Department, so you might not have a choice in how you
proceed. But if you do, the first thing to consider is which approach to budgeting you will use. Then you’ll
need to realistically evaluate the project’s objectives, how you will achieve them, and what you will need
to do so. 8.2 Approaches to Budgeting
You may be required to develop and submit a budget proposal for your own department or division. When
you are determining how to create your budget, there are three common practices: Please click the advert 1. Take last year’s budget and, depending on orders or your subjective view of the year to come,
either add to it or cut from it to arrive at a satisfactory budget for the new year. This is a rather
random method, since it is not informed by what you hope to achieve in the coming year as far as
the growth of your organization. Download free ebooks at bookboon.com
45 Budgeting Your Project(s) Managing Budgets 2. Use the coming year’s predicted sales as the basis for the budget. In this case, the organization
may have already determined that your division receives a set percentage of the sales goal for the
year. However, doing so means that the organization is relatively confident that its sales
predictions are correct. If you are basing them on last year, and last year was a slow year, then you
might end up with less funds than you need in order to keep up with the sales that actually occur.
If last year was a banner year, then you might end up with more budgeted costs than actual sales.
In either case, the accurate prediction of your future sales is important for using this method.
3. The third common method i...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.
- Fall '13