Pretend you are again a manager of your favorite manufacturing company. You have been asked to determine whether a product (one of your choosing) should be manufactured in-house or outsourced to anoth

Pretend you are again a manager of your favorite manufacturing company. You have been asked to determine whether a product (one of your choosing) should be manufactured in-house or outsourced to anoth
Running head: IMPORTANCE OF BUDGET TO A COMPANY 0 Importance of Budget to a Company Student’s Name Institution Affiliations: Instructor Name Course Name: Date Due: Importance of Budget to a Company A Budget is a detailed plan outlining the acquisition and use of financial and other resources over some given period of time. A budget usually represents a plan for future expressed in form of quantitative terms. Budget is critical for effective planning since it contains those process that a company takes in order to achieve a certain desired goal. The benefits associated with budget include the following, first, budget aid a company in planning for its operation. An organization cost, future revenue, and material needed for production are enabled through drafting a budget. A budget enables a company plan for future funds needs in order to facilitate efficient operations. Additionally, a budget helps in coordinating organizational activities of various parts of the organization and to ensure that these parts are in harmony with each other. The budget outline various cost associated with various organization activities and therefore it gives a financial manager methods of controlling expenses and ensuring the company maximizes the resources available in order to improve its overall revenue (Kemp, 2003).Moreover, a budget helps an organization in communicating plans and various responsibilities with an organization. Also, budgets boost motivation among manager because it helps them strive in order to achieve the organizational goals. Besides, Budget acts control tool of cost and expenses as it used by the manager to compared periodical expenses and cost. Also, it aids the manager in evaluating the organization performance in order to determine if the organization is on track. Telsa, Inc design, develop and manufacture and sell high performance fully electric vehicle and energy generation and storage system. Besides, the company also installs and maintains storage system and sells solar electricity. Telsa Inc needs to prepare various budgets in order to have an effective operational process. Some of those budgets which are essential to the company progress include manufacturing cost budget and selling expense budget. Manufacturing cost budget includes Production budget, raw material budgets, direct labor budgets and manufacturing overhead budget (Kemp, 2003). A production budget is very important to Telsa Inc because the company is able to determine the number of units that must be produced. The budget also indicates the required level of inventory needed at the end of the year and number of units if any at the beginning of the year. Telsa Inc must have almost 20 percent of the vehicle fully made before the beginning of the new quarter. Therefore, the company may not run out stock because manufacturing new model of the vehicle requires a long process and therefore having some units on hand it’s good for the future progress of the company. Additionally, the company needs to prepare raw material budgets. This budget determines the number of units of raw material to be purchased. This budget uses production budgets, the required level of ending inventory for raw material and number of units in the beginning inventory. Once numbers of units to be purchased are determined the cost per units is multiplied by a required material in order to determine the budgeted amount of raw material. For example, Telsa Inc needs to budget number units cost of aluminum and other raw material needed like the battery. Also, the company needs to prepare direct labor budgets. Direct labor budget shows a number of direct labor hours and cost of each labor to determine the total cost of direct labor. The company has to determine the number of machine operators and cost of per hours per machine operators and those involve in modeling the aluminum through welding. Manufacturing overhead budget include expected variable and fixed overhead cost for the year. This includes indirect cost of material, labor, maintenance, annual depreciation of machine, supervisory cost, and property taxes and insurance expense. Selling expenses budget include variable and selling expense associated with the delivering the product in the market (Kemp, 2003). Another important budget for Telsa Inc includes a general and administrative budget which details the variable and fixed operating expenses. Telsa Inc incurs the cost of fixed expense associated with salaries of administrative personnel, rent expense and office supplies needed. Besides, the company can prepare cash flow budget. This budget examines the inflows and outflows of cash in the day to day activities. In addition, Telsa Inc may prepare financial budget outlining how the company spends money on a corporate scale including revenue, income, and cost of capital expenditure. Also, the company might prepare a static budget for vehicle showroom. This budget is not affected by volumes of sales it remains fixed. Flexible and static budget is essential for Telsa Inc. The company will use a flexible budget for control and evaluation whereas static budget is essential for forecasting fixed cost for example depreciation, rent, and other costs. Reference Kemp, S. (2003). Budgeting for managers. New York: McGraw-Hill. Dugdale, D., & Lyne, S. (2010). Budgeting Practice and Organisational Structure. Burlington: Elsevier Science. Secrett, M., & Secrett, M. (2012). Brilliant budgets and forecasts: Your practical guide to preparing and presenting financial information.
Pretend you are again a manager of your favorite manufacturing company. You have been asked to determine whether a product (one of your choosing) should be manufactured in-house or outsourced to anoth
Running head: THE BALANCE SCORECARD 0 The balanced scorecard Student’s Name Institution Affiliations: Date Due: The balanced scorecard Balance scorecard in a performance metric used in strategic management in order to identify and improve various internal functions of an organization (Niven, 2011). This performance metric can be utilized to measures Telsa Inc financial performance, customer satisfaction rate, internal process, and organizational capacity. The financial component of the balanced scorecard is used measures how well Telsa Inc is doing financially. The key area of consideration includes revenue, expenses and cash flow. The financial performance component checks whether an organization has sound management whereby the decision made on revenue should have less variance as compared to the desired revenue. The forecasted figure is compared with the actual figure in order to access the variation. The variances reveal the management efficiency in financial forecasting. For example, when actual revenue is low as compared to the projected sales then it means that the company might have made some mistakes while forecasting. Favorable variance includes a situation whereby the rate of revenue projected is more than previous year’s revenue. Telsa Inc has been recording improvement in overall revenue each year which suggests that the company management is effective in forecasting and keeping expenses low. Unfavorable variances include a situation whereby the projected sale revenue is higher than actual sales. The forecasted figure should reveal the financial condition of the organization. Financial consideration is based on salaries, cost of benefits, training, travel expenses, equipment, supplies, rent, and taxes for employees and other expenses (Niven, 2011). This cost influences the overall revenue. Therefore, as manager in Telsa Inc, my key responsibility is to analyze revenue based on the potential expense. Unfavorable variances on expense are achieved when the actual expenses are lower than the project expenses. The second component of balanced scorecard measures the rate of customer satisfaction delivery of product and quick response to customer issues. Telsa Inc product demand and market share increase each day which suggests that the company customers are more satisfied with the brand. Customers concerns about the quality of products influence customer retention and satisfaction ratio. Management in Telsa Inc ensures they maintain proper inventory of finished and work in progress in order to meet customer’s needs. The production budget is used in this case to determine the number of units that must be produced. The budget also indicated the required level of inventory needed at the end of the period. Telsa Inc maintains 20 Percent of its vehicle fully made before the beginning of the new quarters. The finished inventory will supplement the needed inventory on the market. As a result, customer satisfaction and retention level will improve positively. The process component measures the internal process efficiency and how the company utilizes its process in order to cuts cost. Telsa Inc reduces the cost of inventory by utilizing information technology such Enterprise resources planning software’s (ERP). This software’s helps the company function more effectively. Integration supply chain network ensures suppliers and the company communicates more effectively and therefore the company will not incur cost relating to opportunity cost on the profit margin. Human resources planning and task allocation help the company utilize the employees well. If employees are well utilized then the organization will not need to outsource labors. Technology is the best tool which determines efficiency in time and cost. Detail accounts and reports are prepared in order to track firm performance in relation to the utilization of the assets through comparing revenues with assets, labor management by comparing labor with the actual revenue. Lastly, Telsa Inc can use learning and growth component of the balanced scorecard to gauge how the company has improved during the years of operation (Niven, 2011). The areas which indicated learning and growth include employee’s improvement in the organization operation. Motivation and retention level of employees is clear indication of learning and growth in Telsa Inc. Learning and growth to employees are influenced by innovation and development where employees develop new skills. References Hope, J., & Fraser, R. (2001). Beyond Budgeting questions and answers. CAM-I, BBRT, Dorset. Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business Review Press. Niven, P. R. (2011). Balanced Scorecard: Step-by-Step for Government and Nonprofit Agencies. Hoboken: Wiley.