JUST DO QUESTION 9 1 When you are preparing a budget where c

JUST DO QUESTION 9

1. When you are preparing a budget where could you gather information and data from? 2. How could you estimate parameters for your budget? 3. What are the four stages involved in developing a budget? 4. List and describe the 4 most common budgeting approaches 5. You have discussed with the human resource manager the new budget. Why is it now important that you incorporate their suggestions and make the modifications to the budget promptly? 6. What types of resources could be allocated in a budgt? 7. To ensure effective monitoring and reporting of budgets what do you need to do? 8. What are the key processes to effectively manage approved budgets? 9. You will need to prepare financial reports for management. What do reports answer?

Solution

Question No.1: Whenever we prepare budget we should collect the data from past performance of the comapany and also the future expected conditions of economy. The information gathered should be like past project cost, project revenues and also the anticipated costs and revenue. Based on information gathered we should estimate parameters for budget.

Question 2: Estimating parameters for budget can be done as follows:

Analogous Estimating: It uses value of scope, cost and measures of scale like size,complexity of similar project as basis for estimating parameter for this project.

Expert Judgement: The advices of experts can also be used for estimating parameters of budget.

Parametric Estimating: It is used to calculate the cost when productivity of resource which is performing such activity is available.

Reserve analysis: Contingency reserve should be also accounted while estimating costs and revenue.

With the help of above, we can estimate parameters for budget.

Question 3: Stages in developing a budget are:

MONEY IN : Estimate all the potential revenue that may accrue to you in a budget period. Also estimate other income which might be received.

MONEY OUT: List out all expenses and capital expenditure that may be spent by you in budget period.

ASSESS THE SITUATION: Evaluate the market situation and discover at what place you stand in market. Based on above evaluation reconsider your income and expenses for budget period.

MAINTAINING BUDGET: You should be sure to check in periodically whether you confine within the limits of budget if not draft the steps to fall within the limits of budget.

Question 4: Approaches of budgeting are as follows:

a) Top down approach of budgeting: The top management prepares the budget and passes it on the managers for implementation. It begins from estimating costs at higher level.

b) Bottom Up approch of budgeting: Managers prepare department wise and present the same to top level management for their inputs and approvals. Post their approvals, budget shall be finallised and implemented on every business unit.

c) Incremental Budgeting: It is also called traditional method of budgeting. Budget is prepared by taking current periods budget as benchmark and then adding incremental amounts to find new budget.

d) Zero based budgeting: In this all numbers are reset to zero and given a fresh thought process over all the items in budget. It avoids traditional expenditures.