Question One
1) Identify five different functions of a budget. Briefly explain each function (5 mark)
Budget has five different functions: Planning; Facilitating communication and coordination across the organisation; Allocation resources; Controlling profit and operations; Evaluating performance and providing incentives.
Planning: Planning is the first step for the business budget function. It is also control all daily action and long-term develop with 5 or 10 years in the future business. The planning almost focus on reduce the expenditure. When your business have more scale, you must put your idea to a formal plan and definite the costumer type, cleanly money budget and how to service the target costumer (Planning, 2015). Such as forecasts, …show more content…
They indicate the level of difference departments have limited budgetary allocations. Without allocation resources, expenditures will be extending the income (Definition of Resource Allocation, 2015).
Controlling profit and operations: Profit budget consolidation prices and revenue budget report displays the gross and net profit. The final allocation of resources for the produce of profit budget, check alongside respect to the anticipated revenue, control activities, the adequacy of cross-sector and shares labelled as accountable for the commercial presentation of the organization 's management (Operating Budgets, 2015).
Evaluating performance and providing incentives: The budget is a valuable tool, managers’ use to assess the period covered by the performance of their company 's budget is completed. Managers should look at the actual cost, for example, than the budget or planned expenditure. Therefore, managers can see, in order to improve the budget process in the next period of time, the number of actual costs differs from spending plans. The same also applies to the revenue side of the equation. Revenue managers want to see this plan is equal to the actual income, because it will help them plan for the future return on investment (Evaluation of Performance, …show more content…
The existence of barriers to entry is to restrict new competitors, require the operator in a particular industry has some viability. For example, a business may require new competitors to invest heavily in the sector, or the requirements of existing companies need to get a strong customer loyalty are, these are barriers to entry. Difficulty of entry in an industry is important because it determines the likelihood of a company will face new competitors. In the industry, if the low barriers to entry, a source of competitive advantage tend to weaken rapidly. On the other hand, when it is difficult to enter a new industry, its source of competitive advantage for a longer period of time, the company also because of competitive pressures, thereby improving operational efficiency (Barriers to market entry,
1) Identify five different functions of a budget. Briefly explain each function (5 mark)
Budget has five different functions: Planning; Facilitating communication and coordination across the organisation; Allocation resources; Controlling profit and operations; Evaluating performance and providing incentives.
Planning: Planning is the first step for the business budget function. It is also control all daily action and long-term develop with 5 or 10 years in the future business. The planning almost focus on reduce the expenditure. When your business have more scale, you must put your idea to a formal plan and definite the costumer type, cleanly money budget and how to service the target costumer (Planning, 2015). Such as forecasts, …show more content…
They indicate the level of difference departments have limited budgetary allocations. Without allocation resources, expenditures will be extending the income (Definition of Resource Allocation, 2015).
Controlling profit and operations: Profit budget consolidation prices and revenue budget report displays the gross and net profit. The final allocation of resources for the produce of profit budget, check alongside respect to the anticipated revenue, control activities, the adequacy of cross-sector and shares labelled as accountable for the commercial presentation of the organization 's management (Operating Budgets, 2015).
Evaluating performance and providing incentives: The budget is a valuable tool, managers’ use to assess the period covered by the performance of their company 's budget is completed. Managers should look at the actual cost, for example, than the budget or planned expenditure. Therefore, managers can see, in order to improve the budget process in the next period of time, the number of actual costs differs from spending plans. The same also applies to the revenue side of the equation. Revenue managers want to see this plan is equal to the actual income, because it will help them plan for the future return on investment (Evaluation of Performance, …show more content…
The existence of barriers to entry is to restrict new competitors, require the operator in a particular industry has some viability. For example, a business may require new competitors to invest heavily in the sector, or the requirements of existing companies need to get a strong customer loyalty are, these are barriers to entry. Difficulty of entry in an industry is important because it determines the likelihood of a company will face new competitors. In the industry, if the low barriers to entry, a source of competitive advantage tend to weaken rapidly. On the other hand, when it is difficult to enter a new industry, its source of competitive advantage for a longer period of time, the company also because of competitive pressures, thereby improving operational efficiency (Barriers to market entry,