Financial Planning in an Engineering Business

Edmonds, T., Tsay, B., & Olds, P. (2011). Fundamental Managerial Accounting Concepts (6th ed.). New York, NY: McGraw-Hill/Irwin.

Day J. and Krakhmal V. (2006) fourth edition (2011), An introduction to accounting and finance in business, Milton Keynes, The Open University

In outlining a budget there are two phases that must be determined to create a budget, an operating phase and a financial phase. “Developing a new operating budget starts with examining budgets from previous years and identifying what components are going to change, by how much and if any new components need to be added or existing ones reduced or cut” (Budget Challenges, 2012). In the first phase of the budget it needs to be determined how much money is going to be needed to operate the day to day activities of the business.

In addition, what is the impact on the financial statements if the ending finished goods inventory is overstated or understated?

Budgeting systems turn managers’ perspectives forward and by looking to the future and planning, managers are able to anticipate and correct potential problems before they arise (Horngren, Foster & Datar, 2000). Through budgeting, management can plan ahead and maintain enough cash to pay creditors, to have adequate raw materials to meet production requirements, and to have sufficient finished goods to meet expected sales (Kieso, 2002).

Analyze the steps required for budgeting, such as preparing a budget, making a financial plan, conducting a cost-benefit analysis, and making budget decisions.

Financial planning according to business dictionary is the “Long-term profit planning aimed at generating greater return on assets, growth in market share, and at solving foreseeable problems” (Businessdictionary.com, 2015, p. 1). Organizations that are in the process of preparing strategies for the firm must prepare a financial plan detailing the budget necessary to achieve the strategies. In addition, in the financial plan the firm needs to include any personnel, the training if necessary, and any equipment that needs to be purchased. Banner Churchill Community Hospital (BCCH) is working on a strategy to improve the services provided to the

\Governments undertake budgeting as one of the crucial activities with a budget comprising of a plan regarding financial operations that comprise of estimated revenues for financing estimated expenditures within a given period (Florida Finance Officers Association, 2011). Effective budget processes require involvement of all stakeholders so as to enhance in arriving at a budget that is well planned as well as communicated to the respective stakeholders.

A budget is an instrument used to help managers ensure that the resources used effectively and proficiently toward the goals of an organization. A budget projection can be made on a yearly base depending on previous year or existing one. They can further be broken down quarterly or monthly depending on it use. Generating a budget is complex undertaking, and for a budget to be effective the organization ought to follow it strictly. However, no matter how closely a business follows their guidelines there will always be some form of variances. The organization should expect a few variances and be able to work these discrepancies in any budget

12. For next year, Dunphy Company has budgeted sales of 30,000 units, target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 800 units. All other inventories are zero. __________ units should be produced.

Bline, D. M., Fischer, M. L., and Skekel, T. D. (2004) Advanced Accounting. Hoboken, NJ: Wiley.

(b) operating income for the year ended December 31, 20X7. (Do not prepare a statement.)

Expense Budget is consist of financial plans of all non-manufacturing units or departments, like marketing, sales, accounting etc.

The budgeted income statement, cash flows, and balance sheet follow in order. The income budget relies on the revenue and expense forecast from the operating budget, while the budget cash flows are planned for financial and investment activities. A final component of the budget process, the projected balance statement, can be used to tie in all the budgeting dependencies. Once a budget has been prepared, evaluation can be expected before approval. Budgetary components may require several iterations before finalizing the organizational budget.

Financial Planning Financial planning is an appraisal of those financial aspects that may or are likely too occur in future but need immediate decision making. It involves setting financial objectives in terms of profits, sales or acquistion of assets along with financial foorecasting for the organisation. This includes estimation in the areas of: Ø