B3-Budget preparation

Question 1

1. digital sources

Answer 1

1. explanations
   - digital sources are those that can be accessed by computers or other digital devices.
   - some of them are “born-digital”, or originated in a digital form for example, pictures taken with a digital camera, web pages or twitter deefs, others were converted into digital files.
2. digital sources
   - government statistics(demographics, size, age, gender, income, disposable income,occupation and education level)
   - research reports which are available online.
   - social media, eg,facebook, youtube, twitter, linkedln, and instagram.
   - online encyclopedia, eg, wikipedia
   - podcasts, audio files that can be streamed on a computer or mobile device, like portable radio.
   - internal database

Question 2

2. digital sources

Answer 2

data should be structured to incoporate all elements of the business model–input, activities, outputs and outcomes.data should be:

• explicitly linked to organizational objectives-focused on and accepted by users. as decison makers, user should be able to explain clearly why specific data is required to measure strategy ececution. information must then be stored securely and presented in a meaningful way.
• rigorously prepared-data must be sourced, cleansed and assembled; data presentations should be agreed by users early enough to allow performance to be evalued as planned intiatives are implemented.
• supportive of decision making-comprising the measures defined and accepted by users at the time of planning to enable them to evaluate execution and make decisions.
• readily accesible and intelligible to users–users shoukd be able to access the data easily to evaluate performance and future options.
• secure- sensitive information must not be leaked.

Question 3

3. digital sources

Answer 3

data should be structured to incorporate all elements of the business model

• comprehensive-the lowest level of granularity must be easily accessible (by the user) from the highest levels of aggregation to support the different required levels of activity and review.
• consistently defined and labelled–“one version of the truth”.data labels should be in plain language, without jargon or obscure database field descriptors. measures must be defined and decribed consistently across the organisation. a measure dictionary is a useful means for consistent interpretation across the company.
• resilient to change and adaptable–the business model will inevitably be refined over time to track change in the external environment.
• efficient-there may be occasions when the cost of sourcing, assembling, refining and presenting data for a measure outweighs the benefits.

Question 4

4. high-low method

Answer 4

1. select high and low activity levels and their associated costs.
   -the high-low method involves examining past costs and activity levels, selecting the highest and the lowest activity levels and comparing the change in costs between the two levels.
   2.find variable cost per unit.
   -it assumes that variable costs are constant per unit and that fixed costs remain unchanged when the activity level changes. the increase in costs will therefore be due entirely to the increase in variable costs. the variable cost per unit is calculated as by dividing the difference in cost by the difference in activity levels.
2. find fixed cost by substitution
   the fixed costs can be estimated at any level of activity by substracting the variable cost portion from the total cost.

Question 5

5. advantages and disadvantages of high-low method

Answer 5

adavantages
-easy to understand and easy to use
disadvantages
-relies on historical cost data and assumes this data can reliably predict future costs
-assumes that the activity level is the only factor affecting costs
-uses only two values (highest and lowest) to predict future costs and these results may be distorted because of random variations which may have occurred.
-assumes a linear relationship between the two variables

Question 6

6. linear regression and time series analysis

Answer 6

• time series analysis is a term used to describe techniques for analysing the time series to determine wheter there is any underlying historical trend and if there is ,to use this analysis to forecast the trend into the future
• we can also identify whether there are any seasonal variations around the trend and if there are, we can measure the seasonal variations and apply these to a trend and if there are, we can measure the seasonal variations and apply these to a trend line forecast in order to forecast season by season.

Question 7

7. time series analysis-trend

Answer 7

a moving average is in fact a series of averages, calculated from time series historical data.
-the first moving average value in the series is the average of the values for time period 1 to time period n.
-the second moving average value in the series is the average of the values for time period 2 to time period (n+1)
-the third moving average value in the series is the average of the values for time periods 3 to time period (n+2)
the moving average value is associated with the mid-point of the time periods used to calculate the average. this process will be repeated for all the available data.

Question 8

8. time series analysis- seasonal variations

Answer 8

seasonal variations:
-able to obtain data split between quarters or months
-estimated by comparing an actual time series with the trend line calculated from the time series/ difference between the trend line value and the actual historical value for the same period.
–the additive model to calculate the seasonal variation just assumes that the difference between the actual sales or costs in the past with the past trend would continue in the future. hence this method ignores the changes in costs such as because of inflation reasons.
–the multiplicative model would solve the above changing costs/prices problem, it assumes the difference between the past trend and the past actual data would be expressed as a fraction, and this fraction would be applied in the future prediction.
apply to a trend line forecast in order to forecast season by season

Question 9

9. adavantages and disadvantages of linear regression and time series analysis

Answer 9

advantages
-provides a more accurate estimation of the relationship between two sets of data than other methods
-information required to complete the linear regression calculations should be readily available
-computer spreadsheet programmes often have a function that will calculate the relationship between two sets of data
disadvantages
-relies on historical cost data and assumes this data can reliably predict future costs
-assumes a linear relationship between the variables
-only measures the relationship between two variables. in reality the dependent variable is affected by many independent variables

Question 10

10. forecasting demand

Answer 10

marketing mix
-product, price, place, and pormotion
-the marketing mix is extended for service businesses; additional components reflect differences between marketing products and marketing services
market research
-gather opinions from prospective customers
enlist a specialist agency
gather expert opinions
-gather the opinions of our sales team
focus groups
issue questionnaires or a short survey, both on-line, to gather customer opinion