Budget proposal Term Paper Example | Topics and Well Written Essays - 1000 words

Budget proposal - Term Paper Example Section 1. Rationale In line with the corporate goal of XYZ Spa and Body Massage Parlor to keep track of its profit this quarter of the year, this budget proposal will specifically determine the needed overhead costs. This is very important in order that the management will be able to keep track of the expenses involved and the probable projection of the revenue that needed to be targeted. In line with this, the management requires the accounting department to submit a simple budget proposal showing the projected overhead costs of the company at different level of activities. Section 2. Background XYZ Spa and Massage Parlor has recently formulated strategic moves in order to project and increase its revenue. On January, the management specifically appointed the marketing department to formulate marketing activities that will help enhance the current revenue of company. Optimistic about the impact of this strategy, there is a need to plan ahead of time on the needed budget for the ope ration as the marketing strategy will help enhance revenue just in case if it is effective for the customers. From the past trend of the company for its three branches, marketing strategy has proven to be effective. Last year, it contributed about 20% of the revenue for the whole year. The management is quiet satisfied about this knowing that there are other competitors and with this, the company has significantly viewed its competitive edge through marketing strategy. This proposal is in line with the great concern of the CEO to generate budget plan on the overhead costs prior to setting significant revenue and just to be able to adjust cost of the final service offering. This is essential information knowing that the company has also to compete with the current pricing strategy that competitions are setting in the market. Section 3. Projected Budget Shown in Table 1 below is the proposed flexible budget of XYZ Spa and Body Massage Parlor for its three main branches. Included in th e budget proposal are variable overhead costs and fixed overhead costs. The management in general is concerned about the total overhead cost needed for the entire operation under different level of activity based on customers’ visits. However, it is also important to show in details the specific components of both variable and fixed overhead costs prior to sound decision-making process of the management (Garrison & Noreen, 2000; Cross & Richey, 1998; Fess & Warren, 1984). The basic components of variable overhead costs shown in Table 1 are spa and body massage supplies, promotional incentives for the customers, and electricity (variable). On the other hand, the basic components of fixed overhead costs are wages and salaries of staffs, rent, insurance, and utilities other than electricity. Based on the current trend and economic consideration of the inflation rate, the cost of spa and body massage supplies per customer’s visit is $1.75. Incorporating the management†™s marketing strategy with its actual service, it is important to have specific budget of $5.00 per customer on promotional incentives. This is to ensure more customers to avail of the services offered by the company at a specific limited time. This promotional activity and even the budget plan can be good only for one month but it can be extended for the entire quarter depending on the initial

Management accounting and financial reporting Essay

Management accounting and financial reporting - Essay Example Value has been defined in more than one way. In the business world at least, the definition of value ranges from that of finance, to that of marketing. The difference in use according to these definitions are usually the common cause of conflicts with regard to the use of the term. In basic finance, value, or more specifically the value of an asset in economic terms is best defined as the sum of the future benefits, or cash flows to the company which is discounted to the present (Wallace 2008). This is more commonly referred to as the fundamental value (Hanney 2008). On the other hand, built on the argument of benefits that are to be received, value in marketing is usually linked to the asset price that the buyer is willing to pay (OKelly 2008). This is the perceived value. As value is linked to utility, which is linked to perception of future benefits to the receiver of a thing, these two definitions of value, although related in the most basic way, are usually confused when being used (Rossi III, 2009). Perceived value is the concept of true value being reflected in price of a traded commodity (Wallace 2008). This link between value and the price is held by the efficient market theory, where the price includes all the available information in the market and is a good predictor of value (OKelly 2008). Capital markets are considered efficient markets where investors are assumed to be sophisticated, rational individuals who maximise their wealth and utility, and thus only accept prices that reflect the true value of the commodity (Campbell, Owens-Jackson & Robinson 2008). This provides the link between the definition of fundamental value and the perceived value. Accounting regulatory boards have find it hard to define the concept of fair value. According to McCollum, â€Å"obtaining information relevant to fair value is one of the biggest challenges organisations and auditors face in the current market