Cost Amara
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Transcript of Cost Amara
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Application Of Budgeting Techniques
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Introduction
Budget
A budget is simply a plan expressed
in financial and other quantitativeterms.
Profit Plan
Profit Planning is the development of an operational plan to achieve acompany’s goals and objectives
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Profit planning provides management
Actual production cost reports
Marketing Expenses
Administrative Expenses
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Types Of Budget
Long Range Budget
Short Range Budget
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Principles Of Budgeting
Budget Committee
Budget development & implementation
Budgeting & human behavior
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Complete Periodic Budget
Sales Budget Production Budget Manufacturing Budget
Marketing Budget Budget Income Statement Budgeted Balance Sheet Cash Budget
A budget of Capital Expenditure & Research& development Expenditure Cash Receipt & disbursements Budget
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Case Study
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Nestle
It is the Multinational Company. Ithas so many product lines. It is
originating in 1893. Nestle pure lifewas launched in 1998.
Today Nestle is fully integrated inPakistan life and is recognized asproducer of safe nutritious and tastyfood.
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Products
Nestle Milk pack
Nido
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Nestle Pure Water
Every Day
Nestle Creation
Nes vita
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Nestle Pakistan Preferences ForLong Range Budget
Nestle Pakistan is a largest &
international company it has largerange of products and it has differentbranches & offices in Pakistan. So itsbudget plans are long range plans.
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Budget Committee & theirFunctions In Nestle
Decide General Policies/Rules
Request & review individual budget
estimation of different departmentsregarding to human resources,financial production & sales budget.
This committee also recommends in
case of problems in implementingbudget.
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Factors Effect on Budgeting inNestle
Technology
Competitors actions
Economy
Demographics
Consumer tastes & preferences
Political factors
Terrorism & security issues inPakistan
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Budgeting Technique in Nestle
Condition 1: When large sales & profit last year.
Nestle company forms a budget of production with more cost & highsales budget for more sales & revenue generate.
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Budgeting Technique in Nestle
Condition 2: When Low sales & lowprofit last year or previous Records.
Nestle decrease production cost sothat cost of sales low & profit revenue
increase to balance profit purposes & goals of company.
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Nestle Rewards Policies For BudgetCommittee
Nestle Best Volunteer Program
Incentives for Budget committee
S l B d t N tl
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Sales Budget Nestle
Pakistan 2009Area Product Budget Current
MonthBudget PreviousMonth
Actual PreviousMonth
Qty Price Amount Qty Price Amount Qty Price Amount
North P1
{milk pak
250ml}
8000 15.11 120880 6000 15.11 90660 5550 15.11 83860.5
P2
{everyday
40gm}
5000 13.89 69450 4000 13.89 55560 3350 13.89 46531.5
Total 13000 190330 10000 146220 8900 130392
South p1 4000 15.11 60440 3000 15.11 45330 2500 15.11 37775
p2 2000 13.89 27780 1500 13.89 20835 1500 13.89 20835
total 6000 88220 4500 66165 4000 58610
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Promotional Budget Nestle for 2months
Activity Budget Required Details
World Call CableAdvertisement
450000 1 mint advertising 20times a day
World call cable scroll 90000 First two months afterlaunch
Magazines 32000 10000 copies everySunday
Police Relation Activities 5% of total budget i.e25000
Prize money to winnersgiving shirts & key rings.
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Production Budget Six Months
(From Jan 2009 to June
2009)NestleParticulars Jan Feb March April May June Total
Sales 8000 6500 7000 6000 8500 4000 40000
Add: ClosingStock
3000 2500 2800 2100 3500 1800 15700
Less: OpeningStock
1500 1500 1000 800 2000 500 7300
Production 10500 7500 8800 7300 10000 5300 49400
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SWOT Analysis
Strength The company is well known
for its 50 years planningmeetings.
Nestle company has a worldwide network of centers in17 locations on 4 continents.
Nestle has high level of market share thatrecognizes Nestle as a bigbrand name.
Opportunities Potential to expand to smaller
towns and other geographies.
The company has option toexpand its product folio by
introducing new brands.
Weakness Nestle is entering into market
that are already mature and
give a tough competition tonew entrants.
The company has a complexsupply chain management.
Threats Competition from the
organized as well as un
organized sectors Changing Consumer trends.
Changing economicconditions effect onimplementation of budget.
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Conclusion
As profit plan or budget represents theexpected profit level of target andmanagement strives to achieve so any
organization or business company have toset up budget policies and plans forachieving goals and targets of organizationmission.
Nestle Pakistan have followed almost good
techniques to form budget related to salesproduction , manufacturing budget andpromotional budget.
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Recommendations
Nestle Pakistan system of communication shouldallows employees to query their superiors with trust & honest.
Nestle employees should support through counselingand career planning so that they can understandimportance of budget in organization.
Marketing & sales departments play important role of implementing budgeting and get positive results. This
department knows very well about market positioncompetitors strategies. This department should helpin formation of budget.