Module 05 Discussion 1 - Budget Planning

How are budgets useful in the planning of a business? Discuss one type of budget presented in the lecture and explain how that budget contributes to the planning process.

Please make your initial post by midweek, and respond to at least one other student's post by the end of the week.

Hello,

Budgets are useful in planning a business because they give you the road map of what your possibilities are. If you have a Hilton idea but a Holiday Inn budget, you may have to make changes to your planning.

Without a budget, a manager or owner may run out of funds prior to completing the task at hand. Whether it is opening a new business or expanding on an existing business, the budget to expand must cover the costs if a manager or owner wishes to complete the project.

One form of budget is the manufacturing overhead budget. this budget includes all costs other than labor and raw materials. These costs are part of the ongoing expense of manufacturing and should be included within the manufacturing budget. This amount is important because managers can use it to predict future costs and can determine when or where to cut costs.

If a manger fails to utilize this budget, the company may not continue to be profitable. Predicting future costs can allow for allocation of future funds to be set aside to ensure that overhead costs can be met.