The calculation of the company's budget is the main process in planning future activities and forecasting the income and expenses of the company. It will determine the organization's need for the resources that are needed to make a profit, and quantifies the prospects for the firm's existence.
Instructions
Step 1
Analyze projected sales volumes, taking into account product prices and expected profits. Let the marketing department study the market in which the company operates, seasonal fluctuations, the need for advertising campaigns, and competition. As a result, the parameters of the volumes and prices of products should be formed, as well as a forecast for payments, which takes into account the timing of their receipt and the risks of the formation of bad debts.
Step 2
Output the production budget based on the compiled sales volumes. Consider the production capacity of the enterprise, the need to reduce or increase inventory, and the required external procurement of raw materials and supplies. As a result, the volume of production should coincide with the volume of sales, adjusted for the balance of finished goods at the beginning and end of the reporting period.
Step 3
Predict the costs of raw materials and materials that will be involved in the production of products directly or indirectly. Describe the volume of purchases and draw up schedules for making payments for purchased materials. Determine the amount of inventory that your business needs in case of supply disruptions or sales forecast inaccuracies. Plan the cost of labor for workers involved in production, as well as overhead and management costs.
Step 4
Prepare a forecast profit and loss statement of the enterprise, depending on the calculations made. This document, in fact, is the company's financial statements for the next year, which will show the results of the planned activities.
Step 5
Analyze the indicators of the report and determine which of them need to be adjusted to increase income and minimize losses. After making all the changes, it calculates the budget of the enterprise and is approved by the head or at the meeting of the founders of the company.
