Budget Planning and Control

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Babycakes, a specialty bakery, is the company that will be considered for all parts of your budget planning and control report.

Briefly discuss the ways a realistic budget will benefit the owner of Babycakes versus 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 fourth quarter of 2016. Present the number of units, sales price, and total sales for each month; include October, November, and December, and the 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.

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Create three new products, one for each of the three holiday seasons in the fourth 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 the 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 fourth 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.

SAMPLE SOLUTION

Realistic Budget

A realistic budget ensures that a business operates within the confines of its resources, plan for unforeseen situations and keep operating expenses at a minimum (Cardoş, 2014). By having a realistic budget, Babycakes will be able to plan on what resources are needed and their accompanying costs. Also, a realistic budget will help in the evaluation of future performance and motivate employees to meet objectives. Having a prior plan of the management of resources will ensure minimal waste and at the same time, promote | GET AN EXPERT FOR YOUR ASSIGNMENT | having a budget can lead to wastage of resources and unnecessary costs and expenses. Babycakes being a baker of cakes for specific occasions, they need to acquire inputs that cost money. Having a budget will keep track the cost of materials and accompanying fees. Through a realistic budget, Babycakes will be able to achieve their objectives by controlling expenses. Without a budget, it would be impossible for them to keep track of cash inflow and outflow as well as input and output resources. With the help of a realistic budget, Babycakes can estimate future costs and expenses and…