How can a flexible budget be used as a control? (Points : 15) The primary use of a flexible budget is to measure performance by comparing actual costs for a given output with the budgeted costs for the same level of output. A flexible budget is the opposite of a static budget. Flexible budget allows for variability in business and allows for unexpected changes. It distinguishes between fixed and variable costs in this way the budget can be adjusted automatically to a particular activity.
Week 2 Discussion Questions DQ#1: How do you define strategic planning? What are some differences between strategic and financial planning? What financial problems might an organization encounter when implementing a strategic plan? I believe strategic planning is the process, which takes place to set organizational goals to meet the expectations of the mission and direction of the organization. Strategic planning focuses on the long-term goals of an organization, therefore it differs from financial planning.
If you do not have enough money to do certain things you would like to do, then you can use this planning process to prioritise your spending and focus on the money on the things that are most important to you. Once you create your first budget, you can begin to use it and get a good sense for how it can keep your finances on track. Doing this you can easily forecast which months your finances may be tight and which ones you will have extra money. You can then look for ways to even out the highs and lows in your finances so that things can be more manageable. Forecasting your budget gives you an idea how much money you will be able to save for important things like your vacation, a new vehicle, and an emergency savings account.
Rebudgeting is needed to adjust programs and requires flexibility for management needs. Rebudgeting is a way to keep the budget active so it can adjust to ever changing social issues and circumstances. It brings to light a process that can assist government officials in providing the best services to their
In order to achieve that goal, a plan must be implemented. The operating budget is that plan. This plan forces management to think critically about the firm’s operations and consider potential obstacles or issues it may face in the future. Most importantly, an operating budget is essentially a road map used by the management team to reach its destination in the most efficient manner possible. It contains several sub-budgets which serve as a plan for management to follow in order to attain the firm’s goals.
Supply and Demand Simulation Amanda Huenefeld ECO/365 Sadu Shetty January, 14, 2013 Introduction Supply and demand are the two influences that govern pricing in the larger picture of a viable economic market. The two factors are like two forces. Equally the conclusive levels of supply and demand, and the comparative levels of the two in contrast to one another, are significant. The standard of supply and demand is that if one or both varies, there will be a transient difference in the amount of product manufacturers are equipped to sell and the quantity that consumers are willing to buy. This difference will cause the market price to increase or decrease when necessary until the quantities are the same.
Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
This type of budget is different from a static budget, where the amounts are fixed. All types of organization can use a flexible budget, however, the manufacturing, retail, service industries and non-profit organizations will primarily use this kind of budget. A flexible budget can be useful for organizations that can expect a change in activity. For example, a retail store. during the year sales may be slower, and the flexible budget will allot for that.
(Tatum, 2012) There are numerous reasons that a budget is important. One reason would be setting the long and short term goals for a business to follow. The budget in this circumstance is a document that serves
Line item budgeting provides feedback on the extent of revenues and expense living up to the anticipated revenues and expense planning; it relates process to inputs and answers the question, Are agency and programs in keeping with approved budgets? While performance budgeting systems relate outputs to inputs and answers the question, How efficient are the agency's programs? The feedback from performance budgeting systems provides programmatic and financial performance feedback of the extent of the agency’s programs produces outputs, quality, and outcomes and their