Budget Management Analysis
In budgeting, one of the major challenges is accurately predicting the profit margins of a firm. This is because there are uncertainties from changes in the economy and their industry. These factors could adversely affect their earnings. To improve accuracy, accounting personnel must use tools and strategies that will enhance analysis. This will be accomplished by focusing on: tactics for managing budgets, comparing results with expectations and recommending three benchmarking techniques. Together, these elements will provide insights as to the best approaches for controlling the budget. (Kimmel, 2009)
Determine specific strategies to manage budgets within forecasts.
A common issue with any kind of budget is managing expenses. This is because costs will inadvertently rise, as there will be impacts from inflation. When this happens, the firm's profit margins are negatively affected. To prevent this there must be strategies developed that are focusing on intelligently controlling spending and increasing revenues. Some specific approaches that could be used in achieving these objectives include: expense, revenue and profit budgets. ("Operating Budgets," 2005) (Burrow, 2009)
An expense budget is when there is a focus on all of the costs over a select period of time. During this process, there are three different areas which are examined to include: fixed, variable and discretionary spending. Fixed expenses are those costs that will remain consistent. Variable disbursements are looking at those outlays that can become volatile. While discretionary expenditures are studying non-essential purchases that are made by the company. The combination of the elements is providing actuaries with tight controls in the firm's spending. This can help to manage the budget within forecasts, by limiting expenses to those areas that are most essential for the success of its operations. When this happens, they are able to reduce waste and increase productivity through effectively controlling costs. ("Operating Budgets," 2005) (Burrow, 2009)
A revenue budget identifies how a firm can be able to increase its earnings in specific areas. This is used to provide goals that various teams and departments will work towards achieving. These figures are continually updated to reflect how close or far away they are from reaching different objectives. This helps a...
Budget management analysis is used by mangers as a tool and helps determine that all resources available are being used efficiently. The budgets are determined yearly and are based upon the previous year's budget and variances. This paper will discuss specific strategies to manage budgets within forecast, compare five to seven expense results with budget expectations, describe possible reasons for variances, give strategies to keep results aligned with expectations, recommend
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budget management analysis, it generally looks at how budgets can be effectively managed so as to be in line with the forecast that was earlier made. The first section of the easy spells out different strategies that can be applied to effectively manage budgets. The second section looks at budget variance and how they arise and what strategies can be used to remove them. The last section of the
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