rjet task2
A1. Budget planning is in essence the process of forecasting and determining a company’s financial goals for both the long term and short term.
Competition Bike, Inc. has come up with a budget schedule for year 9 operations. Based on its previous years and past financial numbers there are several areas of concern. First research and development is a concern because in the years that they invested more money in research and development it seemed sales where at its highest. Research and development is what keeps you ahead of the competition and what helps you keep your place in the market. By always having the latest and greatest in products and technology you will help secure and keep more customers and retain your spot in the niche market. For year 7, $98, 280 was spent on research and development and that is the year when the company made the most in sales. In year 8 the budget dropped by $16,000 to only $82284. This is the year were sales decreased and was stagnant. For year 9 the budget is only $85,232 not too much higher from the year before. This amount in my opinion is too low because if they expect to beat year 8 sales and make up for their losses they need to invest a little more in research and development. This will help in securing new products and new customers.
Second Competition Bikes has accounts and notes payable at $229,003 for year 9. Although no one wants a lot of liabilities some are a good sign that business in doing well because there were suppliers to pay because more supplies were needed to build more products. For year 8 accounts and notes payable were $261,200 and for year 7 $195,900. The year 9 budget for this account is a little low because for every increase of about $100,000 in sales there is a significant decrease in accounts payable. The company only expects to make $164,000 more in sales for year 9 so the accounts and notes payable should probably be a little higher than projected because they are
Competition Bike, Inc. has come up with a budget schedule for year 9 operations. Based on its previous years and past financial numbers there are several areas of concern. First research and development is a concern because in the years that they invested more money in research and development it seemed sales where at its highest. Research and development is what keeps you ahead of the competition and what helps you keep your place in the market. By always having the latest and greatest in products and technology you will help secure and keep more customers and retain your spot in the niche market. For year 7, $98, 280 was spent on research and development and that is the year when the company made the most in sales. In year 8 the budget dropped by $16,000 to only $82284. This is the year were sales decreased and was stagnant. For year 9 the budget is only $85,232 not too much higher from the year before. This amount in my opinion is too low because if they expect to beat year 8 sales and make up for their losses they need to invest a little more in research and development. This will help in securing new products and new customers.
Second Competition Bikes has accounts and notes payable at $229,003 for year 9. Although no one wants a lot of liabilities some are a good sign that business in doing well because there were suppliers to pay because more supplies were needed to build more products. For year 8 accounts and notes payable were $261,200 and for year 7 $195,900. The year 9 budget for this account is a little low because for every increase of about $100,000 in sales there is a significant decrease in accounts payable. The company only expects to make $164,000 more in sales for year 9 so the accounts and notes payable should probably be a little higher than projected because they are
References: Management by exception - Wikipedia, the free encyclopedia. (n.d.). Retrieved April 24, 2014, from http://en.wikipedia.org/wiki/Management_by_exception What is a flexible budget variance? - Questions & Answers - AccountingTools. (n.d.). Retrieved from http://www.accountingtools.com/questions-and-answers/what-is-a-flexible-budget-variance.html