Whiz Calculator Company
WHY SALES BUDGET???
Sales budget is the most important budget while making the overall budget for the organization for a particular fiscal year.
It is important in the sense that how would anybody make fiscal budget for organization if he don't know about how much to sale or what are the organization's sale would be???
If you knew the sales volume or units of product you want to sale in a particular fiscal year then you will make production budget accordingly & similarly you will purchase raw material & hire labor to meet requirements.
So if you don't know how much you want to sale then how would you budget other things and how would you compare your performance at the end of fiscal year???
Introduction:-
Whiz Calculator Company is currently considering the new method of planning and controlling selling cost. The old method was unsatisfactory according to Mr. Reisman.
According to old method, selling expenses were budgeted on a fixed or appropriation basis. Each October, the accounting department sent records of actual expenses for the preceding year and for the current year - to - date, to the branch managers and to other managers who in charge of selling departments.
Looking into the preceding year’s report & by their judgment, these department heads drew up and submit estimates of the expenses for their departments for the succeeding year.
Then the estimates made by the branch managers were sent to the sales manager, who was in charge of all branch sales. He determined whether or not they were reasonable and cleared up any questionable items by correspondence.
Upon the approval by the sales manager, the estimates of branch expenses were submitted to the manager of marketing (Paula Melmad), who was in charge of all selling, promotional, and warehousing activities.
Then the manager of marketing discussed these numbers with the managers concerned, and after differences were reconciled, the estimates of all selling departments were combined into selling expense budget.
Lastly budget was submitted to the budget committee for final approval.
These budgeted figures were divided into 12 equal amounts and compared to each month actual results. (Pg No. 171)
In the new president’s point of view there were two limitations of the old method. Firstly, there was no 100% confidence in reasonableness of the estimates made by department heads. Secondly, selling conditions changed substantially after the budget was adopted, however under the old method it was impossible to modify the budgeted expenses for these changes.
This section is created to see the financial aspect of the marketing plan. We will consider break-even analysis, sales forecasts, expense forecast in order to meet the marketing strategy.
Similarly systematic placement of other components related to cost accounting such as that of products purchased or sold, the record of the services provided by the health department and the expenses of the services acquired from different companies in the form of purchasing of machinery or hiring of experts for the training of a new machine imported. In addition to this record and data regarding the revenue obtained from customers and sales need also be included. (Penner 2003)
The newly appointed district sales manager, Larry Barr, faces the problem of allocating sales quotas among his various sales representatives. This decision will affect everyone's earnings including his own. This problem is compounded by the fact that different territories have, for a variety of reasons, different potentials. In addition, the territory that is known to be the toughest will soon require a new sales rep.
Birch’s division managers normally were free to buy materials or inputs from whichever supplier they wished, and even on sales within the company; so divisions were expected to meet the going market price if they wanted the business.
As the company investment is based on the profit generated in last year’s so the budget of the project will be defined after annual report is published which define the annual revenue of this company.
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Since there is criticism towards traditional budgeting, the different approach to the traditional budget has gained its momentum. Over the years, traditional budgeting lost its relevance with the modern business world, and it no longer satisfies the needs of the managers. With new budgetary systems alternatives, it will suit better for the need of the modern business.
The use of budgets in the healthcare sector have several benefits and serve several purposes. For example, budgets set the performance agenda for the year ahead through estimation of revenues and expenditures (Byrne, 2007). Additionally, a budget allows a health care organization (HCO) to provide a forecast of income and expenditure or profitability, can be used as a tool for decision making, and as a means to monitor business performance (Leo Issac, n.d.). Forecasting allows HCOs to predict whether a profit will be made or not (Leo Issac, n.d.). Moreover, budgets aid in decision making or determining if a potential expenditure has been planned for or not (Leo Issac, n.d.). Lastly, budgeting allows HCOs to
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