An Exploration Of Budgeting And Forecasting

1095 Words5 Pages
Summary This paper will be an exploration of budgeting and forecasting and how they are determined and why they need to be re-evaluated at the organization I work for. Furthermore, the hope is to uncover some of the underlining causes that are the drivers that trigger the re-evaluations in our organization as well as discover ways to mitigate those factors. Background Like any other business we need to lower our costs, we apparently have difficulties creating a realistic budget, at least initially, and also have great difficulties with accurately forecasting. Are budgeting problems for new products could be due to the fact that prospective costs on new parts take a while to get properly entered into the system, combine that fact with a 12 month projection, times the number of parts missing cost information from our budget document and there will be quite a difference in actual costs at the end. By using a bill of materials for as a guide for new products, items with over $5 per item actually cost difference can be off by as much as 80% overall. We are not any better at forecasting or predicting are sales revenue. It is not as conservative as it should be, we may be taking only the optimistic view or we do not have a good understanding of our place it the market. I’m not sure what’s driving it. However, I do not know that we buy inventory, ramp up staffing, add plants, and equipment solely based on these projections, so we need to do this much better. Also, by using a bill of
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