Assignment Budget Planning And Control Before Approaching Th

Assignment Budget Planning And Controlbefore Approaching This Assignm

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.

Paper For Above instruction

Effective budget planning and control are fundamental to ensuring the financial stability and operational efficiency of a small business like Babycakes, a specialty bakery known for its unique baked goods and seasonal products. A realistic budget serves as a financial roadmap, providing the owner with a clear understanding of expected revenues and expenses, enabling informed decision-making, reducing financial uncertainties, and promoting disciplined resource allocation. In contrast, having no budget at all leaves the business vulnerable to cash flow problems, uncontrolled spending, and a lack of measurable financial goals, which can impair growth and sustainability.

For Babycakes, a comprehensive and realistic budget cultivates better cash flow management, assisting in inventory control and labor planning accordant with actual sales projections. It facilitates identifying potential shortages or surpluses in advance, allowing timely corrective actions. Moreover, a detailed budget supports strategic planning by highlighting profitable product lines and seasonal trends, such as Valentine’s Day or Christmas specials, which can be leveraged for targeted marketing efforts. Ultimately, this enhances profitability, helps monitor performance, and ensures that Babycakes remains financially viable, especially during peak seasons where mismanagement could lead to overextending resources or stockouts.

In developing a sales budget for the LA Babycakes store for the fourth quarter of 2016, I considered typical sales patterns influenced by seasonal demand and promotional activities. For instance, Valentine’s Day is a significant sales driver, and using half of its sales volume as the basis for everyday sales in the quarter provides a realistic baseline. Assuming Valentine’s Day sales are concentrated around February 14th, the sales forecast for the quarter must account for increased activity leading to the holiday, as well as regular sales on non-peak days.

For each month—October, November, and December—the sales are estimated based on unit sales, average selling price, and expected customer demand. Each month contains 30 days, and the calculation involves multiplying the daily sales volume by the number of days. For example, if Valentine’s Day sales on peak days in February are roughly 200 units at a price of $12 per unit, then a typical day in the quarter might involve approximately 50 units (half of the holiday’s peak sales), resulting in daily sales of $600. Thus, October might see 2,000 units sold at $12 each, totaling $24,000; November, with holiday shopping, might increase to 2,500 units totaling $30,000; December, with Christmas and holiday events, might reach 3,500 units or $42,000 in sales. These figures, of course, are based on historical data, current market trends, and assumed customer behaviors, which I will detail further below.

In addition to existing product lines, three new products tailored for the holiday seasons are introduced to boost seasonal revenues. These products include a Halloween-themed cupcake set, a Thanksgiving pie featuring seasonal flavors, and a Christmas gingerbread cookie assortment. Sales projections for these products are based on expected customer interest, previous sales of similar items, and seasonal marketing campaigns. For instance, the Halloween cupcake set could expect 1,000 units sold per month during October, priced at $15 each; Thanksgiving pies might generate 500 units at $20 each in November; and Christmas cookie assortments could sell 1,200 units at $10 each in December. Assumptions include the effectiveness of promotional efforts, customer preferences for seasonal treats, and the impact of competing products.

The appendix of the report will include the detailed actual budget, encompassing all sales, cost of goods sold, marketing expenses, labor costs, and overhead. These figures are incorporated into the overall budget to facilitate variance analysis and control processes. Transitioning from a static to a flexible budget allows Babycakes to adapt to actual sales variations without misrepresenting performance. A static budget remains fixed regardless of sales volume fluctuations, which can lead to unfavorable variances when sales are higher than projected, as fixed costs and expenses do not adjust accordingly. Conversely, a flexible budget recalculates expected costs based on actual sales volume, providing a more accurate performance comparison and emphasizing efficiency rather than misjudged performance.

Addressing concerns about overspending, I identified that unexpected increases in raw material prices and temporary staffing shortages contributed to budget overruns. For example, in the scenario, a spike in flour prices due to supply chain disruptions led to higher material costs, and additional labor hours were needed to meet customer demand. Corrective actions include negotiating better supplier contracts, implementing inventory management systems to avoid over-ordering, and cross-training staff to increase flexibility. Regular budget reviews and real-time expense tracking can further prevent overspending. Such measures ensure that Babycakes maintains financial discipline and sustains profitability even amidst fluctuating costs.

References

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