Conflict among different departments for the success

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Conflict among Different Departments For the success of budgetary control, co-ordination of the different departments is essential. Every department is concerned with the achievement of the individual department’s goal, not concerned with the final goal of the enterprise. In this process, each department tries to secure maximum fund allocation and this creates conflict among the different departments. Depends upon Support of Top management The success of budgetary control depends upon the support of top management. If the top management is not enthusiastic for its success, the budgetary control collapses. So, the wholehearted interest of top management is highly essential for its implementation, in its true spirit, to make it workable and succeed.
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184 15.3.7 PREPARATION OF BUDGETS I. Sales Budget Sales budget is the basis for the preparation of other budgets. It is the forecast of sales to be achieved in a budget period. The sales manager is directly responsible for the preparation of this budget. The following factors are taken into consideration: a. Past sales figures and trend b. Salesmen’s esti mates c. Plant capacity d. General trade position e. Orders in hand f. Proposed expansion g. Seasonal fluctuations h. Market demand i. Availability of raw materials and other supplies j. Financial position k. Nature of competition l. Cost of distribution m. Government controls and regulations n. Political situation. Example 1. The Royal Industries has prepared its annual sales forecast, expecting to achieve sales of 30,00,000 next years. The Controller is uncertain about the pattern of sales to be expected by month and asks you to prepare a monthly budget of sales. The following is the sales data pertained to the year, which is considered to be representative of a normal year: Month Sales Month Sales January 110000 July 260000 February 115000 August 330000 March 100000 September 340000 April 140000 October 350000 May 180000 November 200000 June 225000 December 150000 Prepare a monthly sales budget for the coming year on the basis of the above data.
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185 Answer Sales Budget Month Sales(given) Sales estimation based on cash sales ratio given January 1,10,000 (1,10,000/25,00,000) x 30,00,000 = 1,32,000 February 1,15,000 (1,15,000/25,00,000) x 30,00,000 = 1,38,000 March 1,00,000 (1,00,000/25,00,000) x 30,00,000 = 1,20,000 April 1,40,000 (1,40,000/25,00,000) x 30,00,000 = 1,68,000 May 1,80,000 (1,80,000/25,00,000) x 30,00,000 = 2,16,000 June 2,25,000 (2,25,000/25,00,000) x 30,00,000 = 2,70,000 July 2,60,000 (2,60,000/25,00,000) x 30,00,000 = 3,12,000 August 3,30,000 (3,30,000/25,00,000) x 30,00,000 = 3,96,000 September 3,40,000 (3,40,000/25,00,000) x 30,00,000 = 4,08,000 October 3,50,000 (3,50,000/25,00,000) x 30,00,000 = 4,20,000 November 2,00,000 (2,00,000/25,00,000) x 30,00,000 = 2,40,000 December 1,50,000 (1,50,000/25,00,000) x 30,00,000 = 1,80,000 Total 25,00,000 30,00,000 Note: Sales budget is prepared based on last year’s month -wise sales ratio. 2. M/s. Alpha Manufacturing Company produces two types of products, viz., Raja and Rani and sells them in Chennai and Mumbai markets. The following information is made available for the current year: Market Product Budgeted Sales Actual Sales Chennai Raja 400 units @ 9 each 500 units @ 9 each Rani 300 units @ 21 each 200 units @ 21 each Mumbai Raja 600 units @ 9 each 700 units @ 9 each Rani 500 units @ 21 each 400 units @ 21 each Market studies reveal that Raja is popular as it is under priced. It is observed that if its price is increased by1 it will find a readymade market. On the other hand, Rani is overpriced and market could absorb more sales if its price is reduced to ` 20. The management has agreed to give effect to the above price changes.
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