Potential budgeting solutions

n 2012, Barney and Co. saw a decrease in sales of 20%. The company had also recently purchased equipment to increase productivity, but has incurred the additional expense of paying back the loan for equipment. The loan makes up for 5% of the company’s total expenditures for the period (1 year).

In a 4-5 page paper, please provide the following:

Three potential budgeting solutions in response to a decrease in sales (Use specific budget types to address this question).

Include how the company plans to accommodate for the decrease in sales. Create a budgeting plan for 2014.

Also give at least one suggestion for maximizing the budget in response to the equipment purchase.

APA format

Additional Help

Types of Budgets

Budgets are designed to help management plan for future events. Budgets help evaluate performance and detect potential financial issues before they arise. The budgeting process also coordinates activities between departments and is broken down into several different types.

Master Budget

The master budget is comprised of several interrelated budgets that indicate a plan of actions and is presented for a specific period of time (monthly, yearly, etc.).


Sales Budget

The sales budget is the first budget that is created. The sales budget is created by an earlier sales forecast that gives an estimate of expected revenue for a period.

Sales Budget

Production Budget

The production budget gives an indication as to how many units are to be produced to meet sales goals.

Production, Direct Material, Direct Labor & Factory Overhead Budget

Direct Materials Budget

The direct materials budget gives information relating to the quantity and cost of the items that will be used for production.

Production, Direct Material, Direct Labor & Factory Overhead Budget

Manufacturing Overhead Budget

The manufacturing overhead budget gives information relating to the expected manufacturing costs for a period. The budget shows the different fixed and variable cost amounts.

Production, Direct Material, Direct Labor & Factory Overhead Budget

Selling and Administrative Budget

The selling and administrative budget shows a projection of anticipated operating expenses relating to sales and office personnel. This budget also shows the different fixed and variable cost amounts.

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