The relevance of budget preparation using adequate information from departmental managers

The current budgeting process that is being used by Lisa Lin is not adequate, which is negatively affecting the overall performance of retail store. In addition, the style of budgeting is relevantly not accurate, where Lisa is not using adequate information from departmental managers and preparing the overall budget. The lack of cooperate conditions of Lisa is relevantly forcing the retail store to attain unfavourable budget results, where significant variances are conducted and hamper the departmental managers to support the designed budget. Brown-Liburd, Issa and Lombardi (2015) mentioned that budget preparation is mainly conducted with the help of adequate knowledge from the target departments, as it supports the budget process and management to improve their productivity. Lisa relevantly does not share the requirements of the budget, as she believes that her longest service is enough for drafting the adequate level of budgets for the retail store. Furthermore, Lisa did not consult the manager regarding the operational plans, which directly have negative impact on performance of the retail store.

The budget is negatively affecting the overall business performance, as it is not being prepared accordingly. The departmental condition has indicated that the decline in performance is mainly due to the high turnover of employees conducted in all departments of the business. In addition, the budget used by Lisa is not adequate, which is negatively affecting the overall operational capability of the business. The budget process used by Lisa is relatively not being affective, as higher variance is occurring on yearly basis. The high variance that is detected from the overall evaluation is due to the incorrect actions that have been taken by the budget controller. The budget controller is directly preparing the budget in accordance with her and does not consult any managerial suggestion. This is the main reason behind the high variance, which is being incurred by the retail organization. Furthermore, the departments are lacking performance against the budget, which has been highlighted by various departmental managers. Butler and Ghosh (2015) mentioned that wrong budget preparation directly hampers the operational capability of the organization, as it does not allow the productivity to run 100%.

There are significant implications that can incur when an organization does not properly conduct their budget. The relevant implications are depicted as follows.

The wrong budget preparation directly hampers capability of the organization to effectively price their process. The overall costing that is incurred by the retail shop is relatively not evaluated by the company, as the budget process is incorrect. This is the main reason behind with the overall variance is that is increasing in the retail shop, as the managers are not able to cope up with high-end budget values.

The negative impact of wrong budgetary process on overall business performance

With the wrong budgetary process, the organization will relatively have poor cash flow, as the budget controller is not able to understand the level of activities that is needed to supported operational process of the retail business. Therefore, with the overall problematic conditions of the organization the management will not able to understand the stagnation in their cash flow.

Furthermore, with wrong budgetary process the budget controller will not be able to track the credit conditions of the details, which plays a significant role in the sector. The wrong budgetary process is relatively hampering capability of the managers to make sound decisions regarding the overall supply of the product, as they are not able to detect their credit conditions. Collier (2015) indicated that management without the proper knowledge of budget preparation process is negatively hampering profitability and raises the total cost of operations.

The above table indicates that overall 40 sessions are required for Nicholas to breakeven the overall tennis court expense.

 The above graph relevantly depicts the overall cost-volume-profit condition of overall proposal, which can help in understanding the breakeven point.

From the overall evaluation, it can be detected that the relevant negations can be conducted for tennis court for $13,500, which can be detected from the above table.

The qualitative factor are relevantly needed for addressing the financial performance of operations, which can ensure profits for Nicolas. The qualitative factors that Nicolas should consider are conducted as following.

Customers: The impact of the overall customer need to be considered by Nikolas, as he has only one customer for the overall session. Therefore, the qualitative factor needs to be understood by Nicolas, the overall income will be generated from one individual.

Renting: The overall renting process is needed by Nicolas for comparing the overall project, as the costing of rent will determine the profits generated from the operations.

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