P5: Describe how budgets can be used to set targets to monitor and control an organisation
P5: Describe how budgets can be used to set targets to monitor and control an organisation
To: Managing Director of Supper Fix
From:
Date: 28/11/13
This report is to discuss the ways in which targets can be set to monitor and control the organisation.
Financial resources in a business can be obtained internally such as the profits from last year’s sales, or externally such as a bank loan, having management is these areas can ensure the objectives in an organisation are accomplished they can do this through budgets;
What is a budget; an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.
Sales budget can be used as a starting point of any budget as it projects; the sales of products made by manufacturing business, and services provided by a service of the business therefore the sales budget monitors these aspects.
Production budget can be used as a financial plan about the product in service of being manufactured, this budget then can determine an estimate of how many units will need to be manufactured to meet sales objectives and inventory requirements, therefore enabling a company to track costs.
Purchases budget determines the amount of money and goods that will need to be purchased to ensure their goals, this is will help the organisation as if too much or too little stock is purchased the company can lose out which in turn helps monitor and control the business effectively.
Labour budget determines the direct cost of labour such as wages, salaries, commissions, etc. it also determines the indirect cost of labour such as movement and handling of the product. This is useful for anticipating the number of employees who will be needed to staff the manufacturing area throughout the budget period. This allows management to anticipate hiring needs, as well as when to schedule overtime, and when layoffs are likely. Therefore equating to a more efficient and controlled
To: Managing Director of Supper Fix
From:
Date: 28/11/13
This report is to discuss the ways in which targets can be set to monitor and control the organisation.
Financial resources in a business can be obtained internally such as the profits from last year’s sales, or externally such as a bank loan, having management is these areas can ensure the objectives in an organisation are accomplished they can do this through budgets;
What is a budget; an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.
Sales budget can be used as a starting point of any budget as it projects; the sales of products made by manufacturing business, and services provided by a service of the business therefore the sales budget monitors these aspects.
Production budget can be used as a financial plan about the product in service of being manufactured, this budget then can determine an estimate of how many units will need to be manufactured to meet sales objectives and inventory requirements, therefore enabling a company to track costs.
Purchases budget determines the amount of money and goods that will need to be purchased to ensure their goals, this is will help the organisation as if too much or too little stock is purchased the company can lose out which in turn helps monitor and control the business effectively.
Labour budget determines the direct cost of labour such as wages, salaries, commissions, etc. it also determines the indirect cost of labour such as movement and handling of the product. This is useful for anticipating the number of employees who will be needed to staff the manufacturing area throughout the budget period. This allows management to anticipate hiring needs, as well as when to schedule overtime, and when layoffs are likely. Therefore equating to a more efficient and controlled