Due Week 9 and worth 200 points Before approaching this assi

Due Week 9 and worth 200 points

Before approaching this assignment, be sure that you have watched the following video.

https://www.youtube.com/watch?v=frh3I2rVDzs. YouTube. PLEASE USE DATA FROM VIDEO OR MAKE UP YOUR OWN DATA

Babycakes, a specialty bakery, is the company that will be considered for all parts of your budget planning and control report. For this assignment, you will develop a three to four (3 – 4) page paper in which you address the following.

Briefly discuss the ways a realistic budget will benefit the owner of Babycakes versus having no budget at all. Be sure to use Babycakes as the company and any specific product details in your explanation.

Prepare a sales budget for the LA Babycakes store for the 4th quarter of 2016. Present the number of units, sales price, and total sales for each month; include October, November, and December, and a total for the quarter. Use one-half of the Valentine’s Day sales as the basis for a usual day in the new quarter. Use 30 days for each month. Calculate the total sales for each month for October, November, and December.

Create three (3) new products, one (1) for each of the three (3) holiday seasons in the 4th quarter. Estimate the sales units, sales price, and total sales for each month. Describe the assumptions used to make these estimates. Include an overview of the budget in the report, presenting the actual budget as an appendix with all data and calculations. Add these amounts to your sales budget.

The owner of Babycakes is interested in preparing a flexible budget rather than the static budget she currently uses. She does not understand why, when sales increase, her static budget often shows an unfavorable variance. Explain how a flexible budget will overcome this problem. Use the details of your newly prepared budget for the 4th quarter of 2016 to address her concern.

Imagine that Babycakes is facing a financial challenge that is causing the actual amount of money that it spends to become significantly more than its budgeted amount. Include a discussion of your own unique cause of the overspending. Explain the corrective actions needed to address these challenges.

Integrate relevant information from at least three (3) quality academic resources in this assignment. Note: Please do not use your textbook as an academic resource. Also, Wikipedia and other Websites that are unreliable do not qualify as academic resources.

Your assignment must follow these formatting requirements.

Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.

Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length.

An abstract is not required.

The specific course learning outcomes associated with this assignment are:

Evaluate management control systems and examine their relationship with accounting and planning, including feedback and non-?nancialperformance measurements.

Evaluate decision-making tools for capital investments, budgeting, and budgeting controls.

Analyze financial accounting tools and techniques that convert financial accounting data into information for decision making.

Use technology and information resources to research issues in financial accounting for managers.

Write clearly and concisely about financial accounting using proper writing mechanics.

Grading for this assignment will be based on the quality of your responses, logic and organization of the paper, and language and writing skills. Please review the Rubric for the Assignment: Budget Planning and Control.

Solution

1. benefits of budget vs no budget

a) over spending can be avoided.

b) setting a benchmark for the maximum amount which can be spent for being in profits or business without loss.

c) specific area can be identified i.e. the cause for negative variance can be determined other wise it is difficult to identify due to what the company spending more.

material variance (standard cost * standard quantity) - (actual cost * actual quantity)

if cost is more find for alternate ways to get the product cheaper and if actual quantity is more then spend for better quality.

labour variance ( standard rate * standard hours ) - (actual rate * actual hours )

if actual hours more than standard then find for efficient workers who completes work in standard time.

for the above all budgeting is very important.

2.

oct nov dec

normal sale per day 1000 1000 1000

price / cake 3.5$ 3.5$ 3.5$

no. of days in month 30 30 30

revenue per month $105000 $105000 $105000  

3.

oct nov dec

normal sale per day 900 800 700

price / cake 3.5$ 3.5$ 3.5$

no. of days in month 30 30 30

revenue per month (old) 94500$ 84000$ 73500$   

new product (N1) per day 100 100 100

new product (N2) per day - 100 100

new product (N3) per day - - 100

total (per day) 100 200 300

price 5$ 5$ 5$

days in month 30 30 30

revenue per month (new) 15000$ 30000$ 45000$

total 109500$ 114000$ 118500$

due to introduction of the product revenue gets increased and promotional expenses has also increased

assumptions:-

assumptions taken that normal sales of old product gets reduced due to new product.

every new product introduced is worth 5$

Flexible budget:-

the budget which adjusts or flexes for change in activity is flexible budget. i.e. fixed budget + variable.

if planned expenditure is 1000$ and for each extra quantity extra 5$ is budgeted expenditure is flexible budget.