Westport Electric Corporation

Compares five to seven expense results with budget expectations and describes possible reason for variances and strategies to keep results aligned with expectations

3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]

The paper will begin with a Review of the Research. This section will summarize all the information gathered for this paper. Here the background will be given and the foundation laid for the rest of the report. Next will be the Application of the Research. This is

Open communication between all the staff to help the finance and management come up with correct budget for the company

3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]

Another concern identified, is the utilities expense budget for utilities in Year 9 which is $150,000. This amount is identified as a fixed amount and is unrelated to actually production activities and manufacturing efficiency. Considering that production levels and activity fluctuates throughout the year, the budget for utilities should be a variable item. An example; from Year 7 to Year 8, the utilities expenses increase by $15,000 and with this detection, ways to reduce this expense should be investigate. Another concern is a duplicated line item under the Selling, General, and Administrative Budget for Utilities and Utilities and Services. Another issue for concern, Total Variable Cost was reported to be lower; however was not enough for the lack of sales combined with an increase in advertising and transportation which resulted in an overall negative result. The low Net Sales directly impacted the Contribution Margin which decreased by $49,397. Overall, these concerns indicate the need for a flexible budget with variance analysis.

Since a company’s’ budget is typically based on knowledge from their financial history therefore, if a budget variance occurs, it can be because inaccurate estimates were done, or one or more factors have changed unexpectedly, and the company need to make some type of adjustments to their budget. Once a company discovered a significant budget variance, they will need to identify the cause, and address it accordingly. For example,

The main aim of this research proposal is to explore the extensive situation of the problem of

A cost centre is a department within a company that does not produce direct profit and adds to the cost of running a company. However, all cost centres perform an important job. It improves the satisfaction of customers and indirectly increases sales.[1] The manager and employees of cost centre are not accountable for its profit and investment decision but they are responsible for its cost.[2] They are liable for keeping their cost in line or below budget because cost centre does not produce directly from its activities.[3] The performance of the managers is assessed by comparing the actual expenses incurred with the budgeted expenses for the cost centre. Basically cost is the control data in the cost centre. [

Clarify roles and responsibilities more fully and explain every individual what are the expectation that organization have

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

This assessment is about the requirements to undertake budgeting and forecasting the finances of an organization. After reviewing the case study I have prepared a budget statement.

Bhimani, A., Horngren, C., Datar, S., Rajan, M. et al. (2012) Management and Cost Accounting. 5th ed. Edinburgh: Prentice Hall, p.369 - 378.

Budget formulation and use are tools that guide many decision making strategies in business. The measures that are least effective could create an avalanche of catastrophic events that can negatively impact the decision making strategies. It is in the best interest of the pertinent parties to draft an operating budget based on a collective set of information relating to organizational vision and mission. Ineffective measures can be catastrophic based on the foundation for measures used in creating the budget. Among the many issues organizations face that relates to creating an effective operating budget results from poor

During research of this topic, a problem statement has been formulated that I believe requires some researching into. As with any problem statement, it needs to address the 6 questions that always would get asked concerning research worthy problem statements namely.