In line with this the sales department has taken different cost cutting measures which will reduce our operations cost. Some of these measures include;
It is necessary to briefly explain the process of the budget administration. A manual that describes policies and procedures was used to guide on those issues. A small budget committee was formed with members selected from various functional areas of the department who have expertise in those areas. A high degree of participation has been encouraged in the process in realization that people will support that which they've participated in creating.
Below is the budget that describes the current sales figures and compares this with the projected figures for the 2007 financial year. It also indicates the various expenditures for the same periods.
SALES DEPARTMENT- SWANN COMMUNICATIONS.
Income and Expenditure Budget
Year 2006 Year 2007
Sales $30,000,000 $35,000,000
Staff Costs $11,535,000 $14,675,000
Running costs $11,245,000 $11,018,000
Investment capital $3,750,000 $3,162,000
TOTAL EXPENDITURE $26,530,000 $28,855,000
NET SURPLUS $3,470,000 $6,145,000
Revenue is described as Income arising solely from sales.
Expenditure includes the cost of labor (Staff costs)-these are disclosed separately because they represent 38% of total revenue, overheads, marketing and
advertising and administrative expenses related to sales. Also included is capital
investment in the sales department. These investments include automobiles to aid in
logistics and acquisition of a building to be used as a sales and marketing center.
Surplus corresponds with the target set out at the planning stage. It is the
amount after all expenses have been deducted.
The year 2006 budgetary figures are not set in pro-forma but represent the
actual figures for the year ending in June 2006. The sales revenue is 30 million dollars.
and the corresponding expenses and surplus are as listed.
The projected budget for 2007 is a forecast of events as expected. It serves as
a guide to the feasibility of financial goals set for that period. It allows for amendments to
reflect on the ever changing situations.
Sales are projected to go up by 16% following the planned reforms in the
Staff costs are also forecasted to rise to $14,675,000 again due to the proposed
changes as listed in the planning stage.
In view of the revised cost cutting measures it is expected that running cost will
reduce by 2%.
Surplus will go up and this will be in line with the goals and objectives set by the