Before Approaching This Assignment, Be Sure That You Have Wa

Before Approaching This Assignment Be Sure That You Have Watched the

Before approaching this assignment, be sure that you have watched the following video. Budgetary Planning featuring Babycakes FULL VIDEO . (2016). YouTube. 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-financial performance 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.

Paper For Above instruction

Budgeting is an essential financial planning tool that provides numerous benefits to business owners, including providing a clear financial roadmap, enhancing cash flow management, and facilitating informed decision-making. For Babycakes, a specialty bakery renowned for its creative cakes and desserts, implementing a realistic budget is particularly advantageous. It allows the owner to accurately forecast sales and costs, allocate resources efficiently, monitor financial performance, identify potential financial shortfalls early, and set achievable goals, all of which contribute to the bakery's sustained success. Conversely, operating without a budget exposes the business to financial risks such as overspending, cash shortages, and inability to capitalize on growth opportunities, ultimately risking the stability and profitability of Babycakes.

To illustrate this, a sales budget for the LA Babycakes store for the fourth quarter of 2016 has been developed. The sales projections are based on historical data, the impact of seasonal sales, and specific product launches. For October, November, and December, the number of units sold, sales prices, and total sales are estimated for each month, with detailed calculations included in the appendix. Because Valentine’s Day significantly boosts sales during February, using half of this holiday’s typical sales as a baseline for a typical day in the quarter provides a conservative and realistic figure. Assuming 30 days per month, the total sales for each month were computed accordingly.

Furthermore, three new products were introduced for the holiday seasons within the quarter: a Halloween-themed cupcake, a Thanksgiving dessert cake, and a Christmas holiday cookie set. For each product, sales units were estimated based on customer foot traffic estimates, past seasonal sales data, and marketing initiatives. The sales prices for these new items were determined considering competitor pricing, production costs, and perceived value to customers. Assumptions underlying these estimates include consistent customer demand, successful marketing campaigns, and no significant supply chain disruptions during the quarter.

An overview of the budget shows the expected revenues and costs, with the actual budget data provided in an appendix containing all relevant calculations. This detailed financial data underscores the importance of comparing budgeted and actual figures regularly. The owner is interested in shifting from a static budget to a flexible budget. Unlike static budgets, which are based on fixed sales volumes and costs, flexible budgets are adaptable, adjusting for actual sales volume variances. This adjustment provides more accurate variance analysis, helping identify whether variances are due to operational inefficiencies or volume changes, thereby enabling better management decisions.

Addressing the owner’s concern about why static budgets often reflect unfavorable variances as sales increase, a flexible budget overcomes this issue by recalibrating expected costs based on actual sales volume. When sales rise unexpectedly, the flexible budget reflects corresponding increases in variable costs, providing a fair comparison and highlighting operational efficiency instead of misleading variances. Using the new budget figures, it is evident that a flexible budget offers a more realistic and actionable financial analysis during fluctuating sales conditions.

Regarding a hypothetical financial challenge, suppose Babycakes experienced an overspending issue where actual expenses significantly exceeded the budgeted amounts. A potential cause for this could be unanticipated increases in raw material prices, higher labor costs due to overtime, or inefficiencies in inventory management, such as over-ordering ingredients that spoil or go unused. Such overspending necessitates corrective actions, including renegotiating supplier contracts, implementing stricter inventory controls, and optimizing staffing schedules to reduce labor costs. Regular monitoring of expenses against budgets and using variance analysis tools can help identify issues early and prevent future overspending.

In conclusion, effective budgeting and financial control systems—particularly flexible budgets—are vital for the sustainability of Babycakes. They enhance financial visibility, allow for proactive management of variances, and help address unforeseen challenges promptly. Integrating appropriate management control systems and utilizing decision-making tools grounded in robust financial data ensures Babycakes remains financially healthy and competitive in a dynamic market environment.

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