Question 1: For what purpose does Body Glove use its budgeting system?
Which purposes are emphasized?
The purpose of Body Glove’s budgeting system was to project expenses and forecast revenues for the upcoming fiscal year. The budget is used to monitor performance (but not linked to performance based incentives) and detect early warning signals of problem areas.
The budgeting system allows the managers of each department monitor their expenses in which budgets have been set for materials, salaries and legal expenses amongst others.
Question 2: Trace the steps in the development of the budget at Body Glove. What are the key events that relate to the timing of the steps in the budgeting process? 1. The budgeting process of Body
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The budgeting process meant that managers based their forecasts on a wider scope of information rather than just pre book sales.
Question 3: The case says that Body Glove never prepared a budget prior to fiscal year 1991. How can a company like Body Glove function effectively without a budget, or can it?
Body Glove had a great product with the neoprene wetsuits and had gained significant market share through its niche fun life style image which challenged competitors. The business had a small but loyal customer base, and had attained no.2 market share. Whilst the business had significant growth, I don’t believe it ran completely effectively. An extract from the case state mentions they lost $1 million in sales due to a shortage of inventory and its forecasts on future sales were not accurate.
Anthony, Hawkins & Merchant (2008, p.740) assert ‘If the total costs in a responsibility budget are expected to vary with volume, as is the case in most standard cost centre’s, the responsibility budget may be in the form of a variable budget. Such a budget shows the planned behavior of costs at various volume levels.’ If the company was able to better understand its costs, and forecasts for growth it could have made the necessary investments in upgrading the manufacturing operations to meet the demand.
Body Glove’s reputation was at stake and in 1990 the company decided to break away from employing
Budget management analysis is used by mangers as a tool and helps determine that all resources available are being used efficiently. The budgets are determined yearly and are based upon the previous year’s budget and variances. This paper will discuss specific strategies to manage budgets within forecast, compare five to seven expense results with budget expectations, describe possible reasons for variances, give strategies to keep results aligned with expectations, recommend three benchmarking techniques, and identify those that might improve budget accuracy, and justify the choices made.
The budgets process could help to spread resoursces that increase the skill to get best outcome.
Planning is a function that is employed by every organization in projecting the future outcome of the firm. Successful firms achieve their goals through the use of different types of budgets. These budgets include, production budget, sales budget, labor budget and expenses budget. These budgets also show the targets that should be achieved by the firm within the budgeted time plan.
A flexible budget can be used to forecast a range of production possibilities, or it can be used to assess how well the company met the budget plan based
Investopedia defines Budget as an "estimation of the expenses and revenues over a specific future period of time. Budgets can be made for a group of people, family, person, country, business, government, organization or anything else that makes or spend money. The budget is a micro economic concept that shows the trade-offs made when one good is exchange for another." When looking at the year 9 budget for CB first thing that jumped out at me was the sales goal of 3510 is a 5247450. This is my first immediate concern considering that the storyline has clearly stated it is a down market due to the
This research paper is a brief discussion of budget management analysis. Budgeting is the key to financial management, and is the key to translates an organization goals or plan into money. Budgeting is a rough estimate of how much a company will need to get their work done, and provides the basis for evaluating performance, a source of motivation, coordinating business activities, a tool for management communication and instructions to employees. Without a budget an organization would be like a driver, driving blinded without instructions or any sense of direction, that’s how important a budget is to every organization and individual likewise (Clark, 2005).
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Budgeting is the systematic method of allocating financial, physical, and human resources to achieve an organization’s strategic goals. Budgets are utilized by for-profit and non-profit organizations to monitor the progress towards the goals, assist in the control of spending, and help predict cash flow for the organization.
Budgets serve five main purposes; planning, facilitating communication and coordination, allocating resources, controlling profits and operations and evaluating performance and providing incentives. The budgeting process requires both technical and interpersonal leadership skills to achieve each of these purposes effectively. The director’s memo demonstrates several short comings in the budgeting process. The director instituted the “responsibility accounting system” as a means of evaluating performance. However, the DPW director has not consulted Sam in the budget process. Sam understands that his total expenditures are impacted by relatively unpredictable events that contribute to an uncontrollable element of his cost. The
In conclusion, every major company in the world uses budgeting and there is a good reason for that. It is an important component of financial success. Budgeting makes easier to achieve financial goals. It keeps track of all expenses and help to avoid crisis. It also helps companies to control their growth and provide them with realistic idea where business is going.
with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was
Glove is produce by rubber which is not environmental friendly product. Rubber is a non-renewable resources and it cannot be reuse and recycle. Rubber is widely use in the health and medical field; these glove cannot be reuse again due to the sanitation condition. If we do not address this glove properly, it will cause pollution indirectly. This company also doesn’t have any long-term contracts with other companies hence the stability of the cash flow of the company is not steady even this company is a worldwide company. Top Glove Corporation is lack of brand portfolio because this company only have three brand which is ‘Top Glove’, ‘TG Medical’, and ‘Great Glove” which account for thirty percent of its production. This would make the company to invest in a brand-building exercise when the market reaches a point of saturation in order to defend its market share. Protein allergy is one of the company problems. Although the issue was once much debated, it has subsided in the US as natural
This paper will be an exploration of what budgeting and forecasting are and how they are determined and why they need to be re-evaluated. Furthermore, the hope is to uncover some of the underlining causes that drivers that trigger the re-evaluations in our organization as well as discover ways to mitigate those factors.
A budgetary system is a system that an organization uses for preparing budgets and budget monitoring reports for the purpose of budgetary control. These include systems such as; Bottom-up budgeting, Activity based budgeting, Zero based Budgeting, Increamental budgeting etc.
Budget and budgetary control practices are undeniably indispensable as organizations routinely go about their business activities and operations. These organizations are constantly on the alert on how actual levels of performance agree with planned or budgeted performance. A budget expresses a plan in monetary terms. It is prepared and approved prior to a particular budgeted period and explicitly may show the income, expenditure and the capital to be employed by organizations in achieving their goals and objectives.