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Budget Proposal to the Executives
[Name of the Student:]
[Name of the Institution:]
Budget Proposal to the Executives
Date: mm/dd/yyyy
To: All Employees
From: [Student’s Name]
Finance Manager
Subject: Collection of Data for Preparing a Budget Proposal
We have to make a budget proposal that would be presented to the higher management for approval. It is an important task, and should be completed carefully. You will be provided with the necessary information and guidance below so that you can submit relevant data from your departments needed to complete this budget proposal. We hope you all will do your best in completing the assigned tasks.
Defining Budget and Budget Proposal
A ‘budget proposal’ entails the anticipated costs associated with a proposed work or project. These costs are the closest estimates made by an investigator who has been appointed to analyze the system and ideate the relative costs. It is written to convince an individual or organization that the investigator is capable enough to analyze the system well (Maher, Fakhar, & Karimi, 2018). A budget proposal presents a document that will outline financial information to provide an assessment of the project’s scope. The developed paper is reviewed by management before its practical implementation.
A ‘budget’ is an estimate of the anticipated costs that would occur in the implementation of a program, or completion of a project. A company’s budget reflects its goals, plans, and strategies. It provides direction of activities that will achieve the goals of the company. It gives an idea, a control over the projects and their implementation. A budget is made after adequate analysis of the current systems and problems. It is a tool to evaluate the feasibility of a project or plan. It provides alternatives to the proposed solutions addressing the identified problems (Chong & Law, 2016). It allows the management to choose among available options for a particular project or a specific period of operations. It entails details of plans or projects, reflection of the company's strategies, positions to be filled in for fulfilling the tasks related to the project, and costs associated with the implementation of these projects. A budget provides financial data that is used in allocating funds for a specific project.
Budgets may be short-term or long-term. Projects or plans that need one year or less are considered to be short-term; those which require more time are long-term budgets. Long-term budgets usually last for five to ten years or more. Short-term budgets applied successfully result in the successful implementation of long-term budgets. Budgets can be made for specific projects as well as the whole company. A budget made for the whole company will forecast its future achievements for a certain period, projects to be completed, and production levels. Budgets help the management in making precise and clear decisions (Widiawati & RS, 2019).
Budgets are prepared to demonstrate the needs of a company for a certain period or project. In any case, all the related departments, resources, and time constraints have to be considered in the light of sufficient supporting data. The data needed to complete a budget is collected on request from the respective departments, units, and/or professionals.
Instructions for Providing Necessary Data
Since the budget proposal contains project description, personnel involved, and estimated costs, data related to all these aspects is needed from each relevant department. Further, the information required for making the budget proposal should be accurate, clear, and up-to-date. To collect appropriate information, quantitative methodologies should be used. These methodologies provide numeric data that can be used for precise estimates of elements constituting the project. The information collected by every department will be sent directly to the finance manager of the company who will assemble all reports to compile the proposal. The departments will work collaboratively in collecting the necessary data to increase feasibility and access.
The budget proposal has to be made for a project of developing a new unit that will manufacture certain niche products for the company. This unit is to start operations in ten months. For developing these products, the company needs a research and development team, a manufacturing team, and a marketing team. Further, services of finance professionals are also required. The administrative team will manage the department's inner and outer operations. There will also be personnel that have to carry out operations related to logistics, supply chain, and procurement. It is expected from the departments of this company to provide data necessary for the appointment of these employees. All the relevant departments will be provided with the project's details promptly. They have to review the project details and suggest people for it. Since there are enough employees in every department, it is expected that they will suggest the transfer of some employees from their department to this new project. In case more employees are needed, they will suggest the number of employees related to their particular field to be recruited by the HR department. They will provide results of their investigation through a report that describes the personnel required for the project from their field of expertise.
The direct costs of the project include staff salaries, recruitment and training of new staff, product development, product testing, promotion costs, etc. The instructions needed for estimating staff salaries have been given above. The costs of other departments will be calculated based on the information provided by different departments of the company (Mauskopf & Earnshaw, 2017). The research and development department is involved in creating new products. They will give information given the products intended to be developed. The procurement department will help in assigning the number of employees and their specific tasks for the new project. Similarly, other departments will assist in appointing people to the project.
The data related to the employees should consist of their job description, grade, and salary. These employees are the workforce that will ensure successful implementation of the project and its subsequent completion. Therefore, they are the backbone of the proposed plan to be accomplished. To compile their relevant data, the departments have to make lists that consist of their names, job designations, brief job descriptions, type of job, and their compensation plans or wages, daily or hourly rates. This information is required in properly developed formats used for accounting purposes. It should be noted that the purpose of making these lists of employees' data is to get an estimate of how much they will cost to the completion of the project. The labor or personnel costs have an inevitable role in assessing which and how many workers shall be employed for the project. The management will also decide about the period each employee is going to work for the project.
The HR managers are requested to provide lists of employees’ data with details of their compensation plans. They will be provided the list of workers who are required to work on the project. These are the lists that have been compiled from the data collected regarding the workers needed from every related department. The HR management is supposed to compile an accurate data list of salaries that would be given to the workers from the beginning of the project to its completion (Azzimonti, Battaglini, & Coate, 2016). The salaries should be prepared for would-be staff of all related departments required to establish for the new unit. The details of these employees’ salaries should be given for the staff of the research and development department, production department, procurement, distribution, testing and evaluation, marketing and promotional departments.
For making the budget proposal, costs occurring in acquiring materials and services are required. The costs of distribution and promotion have to be managed. There are overhead costs like maintenance, rent, utility bills, etc. These costs must be included in the proposal budget. There will be expenses of traveling of the related employees. These travels may be intended to make promotions, acquire new economical suppliers, or fulfill regulatory requirements of the products. The expenses incurred on staff accommodation will be included. Further, expenses made for their health insurance, allowances, and incentives will also be included in the budget proposal. The costs of equipment, machinery, materials, and other installed items will be added to the proposal. These materials and supplies can be directly involved in developing the product or they may be related to administrative or other offices. The communication costs should be given due importance. Communications are meant to be inside the new unit as well as outside it.
This is to inform all addressees that the information required for the aforementioned project, positions, and costs have to be provided given the project requirements. Since this project is about establishing a unit of production wherein specific niche products are going to be manufactured, there will be an increased focus on quality. The employee profiles, requirements of product development, and their promotional plans will be developed based on quality requirements and the desired data list will be developed accordingly.
The required information is to be submitted within two weeks from this date. Once the submissions are finished, the information provided will be reviewed and analyzed for the requirements of the new project. The data lists that need to be revised as per the given criteria will be returned to the relevant departments. The final submission of the reports is scheduled to be after three weeks from now.
Your participation will be appreciated.
Works Cited
Azzimonti, M., Battaglini, M., & Coate, S. (2016). The costs and benefits of balanced budget rules: Lessons from a political economy model of fiscal policy. Journal of Public Economics, 136, 45–61.
Chong, V. K., & Law, M. B. (2016). The effect of a budget-based incentive compensation scheme on job performance: The mediating role of trust-in-supervisor and organizational commitment. Journal of Accounting & Organizational Change, 12(4), 590–613.
Maher, M. H., Fakhar, M. S., & Karimi, Z. (2018). The relationship between budget emphasis, budget planning models and performance. Journal of Health Management and Informatics, 5(1), 16–20.
Mauskopf, J., & Earnshaw, S. (2017). Reporting Budget-Impact Analyses. In Budget-Impact Analysis of Health Care Interventions (pp. 165–188). Springer.
Widiawati, D., & RS, T. Y. (2019). EFFECT OF BUDGET PARTICIPATION ON MANAGERIAL PERFORMANCE MEDIATED BY JOB SATISFACTION AND ORGANIZATIONAL COMMITMENT. JOURNAL OF BUSINESS STUDIES, 4(1).
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