Budgeting Case Study: Barney And Co

Budgeting is the process of creating a plan of how to spend the money. A budget is an estimate of revenue, cost, and resources over given stipulated period of time (Lee, 2012). In other terms, a budget is a tool for deciding on which activities to be undertaken in future. The major common types of the budget include the sale budget, financial budget, operation budget, and master budget (Kelly, 2015). For the case of Barney and Co, the decrease in sales can be salvaged through decreasing the production cost. Decreasing production cost can be achieved through cutting down on the projected sales through minimizing the inflow of raw materials. Reduction in inflow is geared toward ensuring that the expenses related to the purchase of raw materials and transportation costs of raw material to the company are reduced.
Additionally, the operation expenses which are stipulated in operation budget should be …show more content…
Destruction in the number of distribution outlet will help the company to minimize the transportation cost for moving goods to various distribution outlets. Additionally, the company intends to cut down on the quantities of inflows. Reducing the quantities of raw materials required for production will enable the firm to minimize the expense incurred in the purchase of raw materials required (Ball, 2012). Furthermore, the company intends to diversify the market for final products. Diversification of the market will enable the company to acquire new potential customers in addition to the traditional customers. Acquiring new customers will enable the company to increase the number of sales without necessarily increasing the scale of production. Apart the aforementioned strategies, the company should cut down on the expense incurred through advertising. Reduction in advertisement expenses will result in a decrease in general expenses hence enabling the company to reduce the general