1. What are some of the advantages of budgeting?

2. What figures would Jake need to get for his brother to prepare the budgets?
3. Do you feel that having a budget would help Jake to see the whole picture?
Class in your reflection, please ensure that you outline the advantages of
budgeting and state the different types of budgets and the purpose. Also write
a detail e-mail to Jake explaining, in simple language, the benefits to be
derived from budgeting.

Some advantages of budgeting.

1. (a) Coordination and Communication by meshing and balancing all aspects

of production or service and all departments in a company in the best
way for the company to meet its goals.
Communication is making sure those goals are understood by all
employees.
Coordination forces executives to think of relationships among individual
departments within the company, as well as between the company and
its supply chain partners.

(b) Provide a framework for judging performance and facilitating learning, It

enable manager to measure performance actual performance against
predicted performance.

© Motivate managers and other employees - Research shows that

challenging budgets improve employee performance, because employees
view falling short of budgeted numbers as a failure. Most employees are
motivated to work more intensely to avoid failure than to achieve
success.

2. Jakes need capital expenditure and financial statement - cash flow,

income statement and balance sheets. The budget will allow Jake to see
a bigger future because it will enable him to have control of his cash flow
(3)

Hi Jake,

I am sending you this e-mail to inform you of the benefit of budgeting. A

budget serves as yardstick in business with which the accountability is
measured as well as the performance is evaluated accurately the
responsibilities in the concerning areas being delineated clearly. It gives
you control of your money so that you do not suddenly having to adjust
to lack of funds.

Budgeting keeps you focused on your money goal by you avoiding to

spend money unnecessarily on items or services that do not contribute to
attaining your financial goal.

A budget enables you to know what you can afford, take advantage of
buying and investing opportunities. It also allows you to save for
expected and unexpected costs.

Reference:

Cost Accounting – A Managerial Emphasis – Horngren et al

Unit 4 Budget and Budgetary Planning