The meaning and essentials of Budget.

 

A BUDGET:

Means an estimation of revenue and expenses over a specified future period of time and is utilized by government, business, and individual. Is a detailed plan of operations for some specific future period. It is an estimate prepared in advance of the period to which it applies, it acts as a business barometer as it is a complete program of activities of the business for the period covered.

The essentials of Budgeting.

A budget can provide a whole host of useful insights to aid business operations. However, as the yardstick for measuring success, it is a process business owners and managers alike need to grips with. These include:

                                              i.            Effective reporting.

A well planed budget helps to effectively report back to governmenting bodies about progress on goals. Also, it gives investors confidence in your operation. Seeing your anticipated income, expenditure and profit expectations planned out may make them more likely to take that leap and invest.

                                            ii.            Improving staff motivation.

It help to improve staff motivation when having a budget and discussing it regularly with your management team and wider staff base. Also, it improve confidence in your business’s leaders. Example, when income targets are being met or exceeded, it gives you a chance to thank people for their hard work and successes.

                                          iii.            Protection from the unexpected.

Budgeting allows you to protect your business from the unexpected as well as enabling you to plan your company’s expenditure, from monthly outgoings, expansion plans and equipment updates.

Financially planning for unforeseen and unavoidable circumstances such as a key piece of equipment breaking down, means funds will be available if you need them. Budgeting helps to avoid the risk of debt or half tooperations caused by the need to redirect funds from one area to another.

                                          iv.            Supporting big decisions.

You will have the data you need to make big decisions which may involve funds moving in and out of your business by budgeting every year. Decision about whether you can afford pay increases, a premises move or equipment updates can all be aided with data from the budget. Profits may be slightly higher or expenditure lower than expected, meaning these additional costs will be covered easily.

 

 

 

                                            v.            Business goal setting.

Budget can provides a whole host of useful insights to avoid business operations. Tracking income and expenditure can help managers to set goals around production targets, sales forecasts and marketing campaigns as well as problem solve if things aren’t going as planned.

 

(b)   The objectives and Importance of budget.

Many companies go through the budgeting process every year simply because they didi it the year before, but they do not know why they continue to create new budgets.

Objectives of budget are:

i.                    Allocate resources.

Budgeting process some companies use as a tool for deciding where to allocate funds to various activities.  Example.  Fixed  asset purchases.

ii.                  Predict cash flows.

The companies that are growing rapidly use a budget extremely that have seasonal sales, or which have irregular sales patterns.

iii.                Provide structure.

A budget is especially useful for giving a company guidance regarding the direction in which it is supposed to be going. Thus, it forms the basis for planning what to do next.

iv.                Measure performance.

A common objective in creating a budget is to use it as the basis for judging employee performance, through the use of variances from the budget.

v.                  Model scenarios.

You can create a set of budgets, each based on different scenarios, to estimate the financial results of each strategic direction, if a company is faced with a number of possible paths down which it can travel.

 Importance of Budget.

 Creating a budget is an important pillar of your overall success and security. Since it allows you to oversee and better understand whether your business has enough revenue to pay its expenses.

i.                    It helps you keep your eye on the prize.

A budget helps you figure out your long term goals and work toward them.

ii.                  It helps to ensure you don’t spend money you don’t have.

Far too many consumers spend money they don’t have and we owe it all to credit cards.

iii.                It helps to save for unexpected costs.

Careful budgeting can help take the sting out of unexpected bills by making sure you have a pot of money to fall back on when you need it the most.

 

iv.                Makes it easier to stay aware of your savings and debts.

A good budget will keep you aware of when your debts will be paid off  and identify when you may have additional money that you can redirect into savings or spend on an occasional treat.

v.                  Helps you focus on your financial goals.

Planning for the future and working to an objective allows you to plan big purchases, like houses and cars, without worrying you will miss the mark.

 

(c)    The process of budget preparation.

 

1. Assess your financial resources

The first step is to calculate how much money you have coming in each month. This might be investment income, government assistance, student loans, employment income, disability benefits, retirement pensions or money from other sources.

 

2. Determine your expenses

Next you need to determine how you spend your money by reviewing your financial records. If your records aren't clear, consider keeping a financial diary to track your spending. Be sure to separate the fixed expenses that you must meet (mortgage, rent, car payments, and insurance) from variable expenses (food, clothing, entertainment, charitable gifts). Once you see your spending patterns, you may be able to make adjustments to certain expenses.

 

3. Set goals

Establish a list of the goals you wish to achieve. These can be long-term goals like purchasing property or funding your retirement. Or they can be short-term goals such as home improvements or car maintenance.

 

4. Create a plan

Once you've figured out how much money is coming in and where it's going, you can put together a plan that matches your goals with your financial situation.

 

5. Pay yourself first

When you pay yourself first you simply set aside a certain amount of money each month to go into an account that you will not touch. You can set up a separate savings account for infrequent but anticipated expenses, such as property taxes, vacations, automobile insurance or car maintenance. Our Jumpstart® is specially designed for these types of savings plans.

 

 

6. Track your progress

At the end of each month, you should re-evaluate your budget. Compare your actual expenses and income to your budget and make appropriate adjustments.

(d)   A master budget.

Is a financial document that includes how much an organization plans to make and how much it plans to spend over a fiscal year. This document typically reports financial information in quarters or month.

Example, A company may incorporates its sales budget, the cost of goods sold, cash budget, capital expenditures, inventory, total assets, etc.

 

(e)    Budgets which are included in the master budget.

A master budget will show all the details of the company’s income generating actions via the operating budget, with an overview of revenue and expenses. It will also show  cash inflow and outflows from the cash flow statement, and estimation of what will appear on the balance sheet at the end of the accounting period.

 

(f)    The first step in preparation of master budget.

The first step in creating the master budget is the sales budget. Since the budgets of other departments are predicted on the sales budget, it is critical to anticipate the sales budget accurately. The sales budget includes information about the sales forecast based on past sales data, price per unit, the number of unit sold, and total revenue generated.

 

(g)   By using example, the following budgets are prepared as follows.

 

i.                    Sales budget.

The sales budget details the expected sales in units and the sales price for the budget period. The information from the sales budget is carried to several places in the master budget. The sales budget requires the business to generate a sales forecast for the year that will use the following information to generate sales.

·         Sales activity for the business from previous year

·         Competition sales activity

·         Industry trends

·         Economy wide trends

·         Planned marketing campaigns

·         Weather

 

 

 

 

Example.

Big bad bikes use information to estimate the number of units that will be sold in each quarter of the coming year. The number of units is multiplied by the sales price to determine the sales by quarter as shown in the table below.

SALES BUDGET FOR THE YEAR ENDED DECEMBER 31^st 2019.

	Quarter1	Quarter2	Quarter3	Quarter4	TOTAL
Expected sales (units)	1,000	1,000	1,500	2,500	6,000
Sales price per unit	$   70	$    70	$    75	$    75	--------
Total sales revenue	$ 70,000	$  70,000	$112,500	$187,500	$440,000

 

ii.                  Production budget.

In creating the production budget a major issue is how much inventory should be on hand. Having inventory on hand helps the company avoid losing a customer because the product isn’t available. It is prepared as: The number of units expected to be sold plus the desired ending inventory equals the numbers of units are available. When the beginning inventory is subtracted from the number of unit’s available, management knows how many units must be produced during that quarter to meet sales.

Example.

To illustrate the steps in developing a production budget, recall that big bad bikes is introducing a new product that the market department thinks will have strong sales. It is shown in the figure below.

             PRODUCTION BUDGET FOR THE YEAR ENDED DECEMBER 31^st 2019.

	Quarter1	Quarter2	Quarter3	Quarter4
Expected sales	1,000	1,000	1,500	2,500
Desired Ending inventory	300	450	750	1,050
Total required units	1,300	1,450	2,250	3,550
Beginning inventory	0	300	450	750
Required production	1,300	1,150	1,800	2,800

 

iii.                Material usage budget.

It is typically presented in either a monthly or quarter format in the annual budget. The material usage budget calculates the materials that must be purchased, by time period, in order to fulfill the requirements of the production budget.

Example.

LEE company plan to produce a variety of plastic goods and 98% of its raw materials involve plastic resin. Thus, there is only one key commodity to be concerned with. Its production needs are outlined as follows.

iv.                Material Purchase budget.

Material purchase budget will tell the estimated amount which you will spend on buying of raw material which is used in production. Because, it is big amount, so you should forecast it in advance by using simple accounting techniques.

 

 

 

 

 

 

 

 

 

Example.

Your estimated cost of production is $10,000 of the month of January, 2015. At the end of January, it is estimated, you will have closing raw material of $5,000. At the beginning of January, opening raw material is $2,000. Calculate the budgeted value of material purchase.

            CALCULATION OF BUDGETED MATERIAL PURCHASE.

   Estimated Cost of Production                                                             $ 10,000

   Add: Estimated closing stock of raw material                                    $  5,000

                                                                                                               $ 15,000

   Less: Estimated opening stock of raw material                                   $ 2,000

   Budgeted value of Material Purchases                                            $ 13,000

v.                  Labour budget.

These are wages paid to employees to manufacture a product. Because of rising and falling demand, you need to create a budget for the coming year. This will tell you how much you need to spend in each month, and help predict when you need to hire or layoff employee.

 

 

(h)   Using the financial data to prepare simple cash budget.

A cash budget is an estimation of the cash flows of a business over a specific period of time. This could be for a weekly, monthly, quarterly, or annual budget. This budget is used to assess whether the entity has sufficient cash to continue operating over the given time frame. The cash budget provides a company insight into its cash needs (and any surplus) and helps to determine an efficient allocation of cash.

Methods of preparing cash budget.

The financial managers make use of the following methods for the preparation of cash budgets:

·         Receipt and Payment Methods

·         Adjusted Profit and Loss Account Method

·         Balance Sheet Method

Example.

By using the data in the Balance sheet and Projected Profit & Loss A/c, prepare Cash Budget for December 31 2007.

SOLUTION:

Conclusion.

To conclude, Cash Budget lays attention on the actual flow of cash within and outside the business. It provides an insight into the cash position and vital information for financial planning.

 

The relationship between Census and Human Development.

 

Meaning of Census:

it includes the total process of collecting, compiling, analyzing, evaluating, publishing and disseminating statistical data regarding the population and housing and their geographical location. Population characteristics include demographic, social and economic data and are provided as of a particular date (reference period).

Census is important because it lies in its being an integrated picture of society in a given time within numerous, multiple and continuous changes, which cannot be defined through other data collecting methods. The census provides a suitable database for comparisons and projections of demographic data as well as social and economic characteristics of society.

Meaning of Human Development:

 is the process of enlarging people’s freedoms and opportunities and improving their well-being. It is about the real freedom ordinary people have to decide who to be, what to do, and how to live. It is the capacity of a state to increase its human resource with the aim of achieving higher outcome of production for the satisfaction of the basic needs of majority of its citizens and empowering them to make demands on the government.

There are various factors that can be considered as determining human development which are social infrastructure, industrialization, population density, economic growth, government expenditure, and inequality in income distribution.

Census and Human Development are to be related according to their benefits and uses in the society that are;

Development planning purposes:

The census provides essential data pertaining to demographic, social and economic characteristics of the population and housing which can be used for planning at all levels and lead to human development by planning how to utilize the available resources according to the number of the people to the location.

Estimation of levels and variations in population and housing characteristics:

The census data identifies summary levels and standards as well as changes in the demographic and dwellings characteristics, the availability of basic necessities, neglected areas, and other National priorities, help the government and all users of this data to make plan on human development.

Estimating sources of labor force:

The census is considered to be the main source of information related to the size of labor force and its characteristics, as well as other aspects related to the education and training, both present and expected levels, and national policies needed in this field. So, according to those information obtained will help in Human development because there will be known the real number of skilled and unskilled labour and lead to the improvement to those unskilled labor.

Identifying the role of women and their economic and social standing:

 Recent decades witnessed an increasing attention to the role of women in society. This matter has become a central issue. Governments all over the world are interested in collecting statistics on women for designing programs and identifying policies needed for improving and up grading their role, as well as their social and economic standing in the society.

Learning about special population groups:

There is an increasing concern in regard to specific population groups e.g. children, youth, elderly persons, disabled… etc. Indicators about these groups help in designing programs and policies which serve their interests. Example by proving basic needs like food, shelters and clothes and other human wants.

Use for research purposes:

Population and housing census data provide a rich source of information for carrying out demographic, social and economic surveys. This improves the human development example by building schools, hospital etc to those places that have no hat important services to the society.

Use for economic purposes: Economic decision-making relies on scientific facts and the Census provides facts and actual data.

Census data will identify a comprehensive frame for all active:

Establishments, and a base for an economic census/survey which will follow the census e.g. annual economic surveys associated with the national accounts estimates also it is important to make human development by the government.

Therefore, census and human development are related widely and it look to be applied at the same time in the society. Also census information are helpful in human development because it provides basic data for all sectors in the country (education, health, population, etc.) with a view to contributing to the formulation, monitoring and evaluation of plans related to the provision of services needed by the Tanzania society.

 

Communication problems and mistakes people makes.

 

Communication problems and mistakes people makes.

Not truly listening.

When are communicating with someone, we are often are not committing our full attention. We might be looking at our phones, watching television, or even daydreaming about something else. To avoid communication mishaps, it is about to give the speakers 100% of our attention. Effective listening skills include making eye contact, asking clarifying questions, and remaining engaged.

 Assuming you know the message before the person finishes.

We have all done it. We are listening to a friend speak, and we already assume we know what is going to be said before they finish their sentences. When we assume we know what the person will say, we miss what is actually being said. Honer the speaker by remaining openly curious and listening intently for the message rather than predicting what will be said.

Interrupting the speaker. 

We’ve probably all interrupting can make a person feel invalidated, as if what they have to say is unimportant. Have respect for the other person and allow them to finish the massage entirely before you respond.

Letting you emotion dictate your response.

When we react emotionally, we are likely to say things we don’t mean. A good communicator allows emotions to it for a while and then choose to carefully respond rather than react.

 Failing to account for cultural differences in communication.

 Cross-cultural communication can be difficult.  Words can take on different meaning, and cultural norms surrounding nonverbal communication may vary. When communicating with people from other cultural backgrounds, it’s important to account for cultural differences in communication style. If we don’t, we may accidentally offend or miscommunicate with someone.

Misinterpreting the message.

We may misinterpret others more often than we think. To avoid this, it is better to give the person our full attention and paraphrase the message back to the speaker to ensure we have understood correctly.

Being indirect.

Being subtle and or indirect communication is usually ineffective. We cant expect other people to read our minds. If you want someone to understand yo, try to understand you, try being direct and try not to beat around the bush in conversation.

Avoiding difficult conversations.

When faced with the possibility of a difficult conversation, many people choose to avoid or prolong the conversation as long as possible. People usually perceive a conversation as difficult when they are faced with telling someone something that person doesn’t want to hear. It might be delivering bad news or beginning up a conflict of interest.

 

 

Steps involved in designing and developing marketing information.

 

               

                                                                              

Marketing information system(MIS)

is a continuing and interacting structure of people, equipment and procedures, to gather, sort, analyze, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision make us to improve their marketing planning, implementation, and control .Marketing  information system is a management information system designed to support marketing decision making, information systems have to be designed to meet the way In which managers tend to work .Jobber (2007) defines marketing information system  as a system  in which marketing data is formally gathered, stored, analyzed and distributed to managers in accordance with their informational needs  on a regular basis.

 The following are the steps involved in designing and developing marketing information system;

Determine what metrics to include in your marketing information system;

this is said to be very important step in creating marketing information system, marketing metrics are what marketers use to monitor, record and measure progress over time metrics are used to measure progress towards short and long-term goals and objectives. Every area of the business has specific metrics to monitor for example Finance team track revenue metrics like customer acquisition cost. Marketing metrics are important in information system because it helps to get data to support decision made and budget allocation.

Gather relevant data;

 it is a process of collecting data for business use, these data come from two sources which are internal sources and external sources where by internal sources involves sales records, accounting figures, website analytics and other data comes from external sources like customers, competitor results, economic metrics and so on, these data are collected through different ways like surveys, online tracking, observation and others.

Plot data (Graph the data);

by plotting data in a systematic way  will help to bring clear information of data to the customers, as it is very difficult to make decision based on raw data because sometimes it shows invisible patterns that may indicate wrong  appropriate. Therefore plotting data help to allow managers to quickly make changes in critical metrics over time also plotting data makes the job easier. So visualization  of data is very important in marketing information system.

Communicate results;

 in this step, not everysone will understand tables of raw data or even visualizations interpretation is required step by step to make people understand their business trend is  whether they are making profits and rise or they are making  loss, so as they can find a solution on how to improve their business, so the results should be spoken so as each one can understand the level he or she is.

Make marketing decision;

this is among the final steps of making information system