April 24 at 12:42 AM
Lindsey Blanford
DB Week 6
Budgets are a tool that have been used for many years. They are tools not only utilized in business but also in personal lives as well. Although, a budget is not something that is set in concrete stone. In fact a budget is simply a prediction of the financial situation that is going to unfold, base off of the past budgets and spending and the companies current financial capabilities. As stated before a budget is simply a prediction / guesstimate from the company that is based off of a multitude of current and past factors. This my no means has to be the end all be all budget. It is flexible, but gives for a good idea of what is too come in future spending for the company.
Some things that could change the budget, would be if everyone of a certain department was either laid off or quit. You have less people to pay but there is more money being poured out in order to keep preduction high and products moving. While you would also have to spend time and money bringing in new workers and trainging them. These are all situations that were not ecpeceted but need to be addressed for the good of the company and therefore they will affect that actual price for which a prodcut is sold in order to make up or those unexpected spends.
This is only one scenario of why budgeted price and actual price could vary. There are many things that come up in Spending through out the course of a calederar year, what is important is to be ready and have a plan and most hiccups can be handled relatively smoothly, even if it strays away from original price that was set in the budget.