Budgeting and Variance Analysis

750 Words3 Pages
Introduction The objective of the Learning Team D, Mauricio Cruz, Nichole Guerra, Srinivas Sangani, and Sterling Mason is to discuss and write a paper on how budgeting and variance analysis helps managers to make decisions. Budgeting and Variance Analysis The major responsibility of a manager is to plan for future. An organization to be successful, it has to make short-term and long-term plans. These plans sets the organizations objectives and ways to accomplish the goals of the organization. A budget is a formal written plan at an organizational level for the outgoing expenses and incoming revenues for a specific period. The purpose of the budget is to ensure that the funds are available to accomplish the objectives of the…show more content…
The budgeting analysis is advanced within the core of a sales prediction. Sales anticipation has a several of factors: (1) what are the economic conditions, (2) industry flow, (3) market research studies, (4) advertising promotion, (5) former market share, (6) pricing, (7) technological growth. Companies with large budgeting has committees that has the responsibility for combining preparation of the budget. “The committee ordinarily includes the president, treasurer, chief accountant (controller), and management personnel from each of the major areas of the company, such as sales, production, and research” Budgetary Planning chapter 20 pg. 1034. These committee review and modified and give management the chance to defend the budget goals or petition. The advantage of budgeting analysis plan ahead gives management a target goal and help to evaluating clear objectives or determine early cautionary problems. Its necessity to have sound organizational structure, because this defined the operations. Budgeting analysis can be prepared for any period of time and this influence can affect the budget. Companies prepare budgets so they can plan the evolution of their business. Budgeted costs allow them to set prices, project sales and estimate profits. For a wide variety of reasons, costs and revenues can come in higher or lower than calculated. Budget variance analysis addresses these differences and helps companies adjust budgeting procedures
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