Start-up Budgeting

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Theaspect of the value chain in a manufacturing company is pragmaticallyreferred to the activities that are usually laid down by the firms asthey convert raw resources into complete goods (Horngren, Foster,Datar, Rajan, &amp Ittner, 2015). Value chain comprises of reducingnon-value adding activities. The main rationale for the aspect ofvalue chain analysis is to assist harness the accessible resourcesand use them effectively towards final goods production. Value chainanalysis also helps to reduce the operation cost and also increasesthe quality of the anticipated final products.

HilfigerSportswear Manufacturing Company

Thetype of a company that I would like to start is Hilfiger ClothingManufacturing Company. The primary reason I chose this type of acompany is because of the broad range of market that is readilyavailable (Fauré,&amp Rouleau, 2011, p.180).For a company like mine, one has to understand totally the currenttrends in the market so as to enhance my company compete effectivelyand favorably. Some of the needed requirements for the clothingmanufacturing company include the highly skilled staffs’ memberswho will be capable of transforming the diverse designs intooutstanding clothes since the needed employees will be the sewers,fabrication coordinators, cutters and vastly experienced designers.

Inthe clothing industry, the most successful companies in thisparticular field are those that have their own designers’ labelssuch as Nike, Puma, and Adidas among others. In this particularsituation, the target market is always vital, and so my primaryconcern will be sporty clothes for youths and girls form my majortarget group.

Typeof budget I want to implement and budget review steps


Financeis basically vital in every success of a business. Hence it is in thebest interest of a company to develop a budget that covers all thesales expected as well as the expenses expected because in doing thisaspect it will make sure that the firm stays buoyant. The mostsuitable type of budget for my clothing firm is the operationalbudget. Operational budget usually comprises of expenses and revenuesthat a business carry out in its daily operations. Revenues usuallycovers all the income that are usually secured by the firm whereasthe expenses usually define the entire cost of raw resources, thecosts that are always involved in the process of production,delivering and packaging until it get to the anticipated consumers inaddition to the costs of administration (Horngren et al., 2015).

Inmost circumstances, operational budgets are usually reviewed yearly,but some reviews are done in between months so that financeexecutives will have the capability of comparing diverse results andmake any adjustments so as to make sure of the continued success ofthe company. Budget review steps comprises of the ones that willassist hasten the business growth efficiently. The laid down stepscomprises of the strategic planning that assists the firm operatetowards a definite goal and how they plan to realize theirobjectives. Thus, a budget must be set up towards the company vision.Company aim is another step that is involved. Formulated budget mustoffer all the financial gains sources that will assist the firmnavigate towards the objective so as to assist the company growth andalso facilitate all the day to day operations. In addition to that,there must also be projections of revenue that involve expected arise in income that should be involved in the budget.

Theseprojections must start from the prior firm financial experiences.Company board approval and projections of profit margin since asuitable budget must be approved by the company board of directors,and sometimes the company financiers approve so as they can provideassistance with the capital provision. Margin of profit also makessure that the returns towards the company stability.

Specificbenchmarks I will utilize in my company

RoyalManufacturing Company is a privately held firm that is categorizedunder clothing makers and has estimated revenue of USD 3 to 6 Millionwith approximately 15 employees. Royal is an ideal firm to benchmarkbecause of its few employees, but its success is much notable (Fauré,&amp Rouleau, 2011 p. 177).The company located in California, USA.

HYoung Sportswear Company which is listed as a clothing manufactureris another clothes firm to target because it consists of about 4 to10 employees, but it has approximated annual revenue of $0.6 to$1Million and is located in San Antonio, Texas. The approach thecompany operates, the few employees but significantly increasedrevenues is the major aspect of utilizing the company as benchmark.

NikeSportswear Company is another major rival to Adidas Company in thesports world that has huge success. This aspect makes every companyaims at having a chance to attain such big success that it have.

AdidasSportswear Company is a major firm in the sports world having secureddiverse notable deals in the world. It sponsors big league clubs suchas Manchester United, Real Madrid, and Chelsea FC and this makesevery company wish to attain such huge success.

Costsystem I plan to implement in my company and challenge expectedalongside its solution.

Inmanufacturing companies, the managers should establish the total costof the products produced. Consequently, it is worthwhile to utilize acost system such as job costing system since this particular systemallocates costs to products on the production batches basis. Forinstance, in clothing making firm where they produce shorts andt-shirts, they have to produce them in batches and allocate the costthat each batch has used alone. The major challenge with thisparticular cost system is that it accentuates all operating costs ina business that includes overhead costs. This aspect can make thecost of a particular product a bit higher than expected price thusscaring consumers. For a company to overcome this challenge it isadvisable to standardize prices so that some products will cover theadministrative costs (Howto Start a Clothing Manufacturing Business, n.d).


Fauré,B., &amp Rouleau, L. (2011). The strategic competence of accountantsand middle

managersin budget making. Accounting,Organizations and Society,36(3),167-182.

Horngren,C. T., Foster, G., Datar, S. M., Rajan, M., &amp Ittner, C. (2015).Cost accounting: 2015 custom edition (15th ed.). Upper Saddle River,NJ: Prentice Hall-Pearson.

Howto Start a Clothing Manufacturing Business. (n.d.). Retrieved January31, 2016, from

Start-up Budgeting

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Typeof Manufacturing Company

Iplan to come up with a car manufacturing organization since mostpeople use vehicles while traveling to their workplaces and otherplaces for private businesses. Although there are several companiesthat deal with production of vehicles, I intend to make mine uniquesince I will incorporate engineers who are going to be part andparcel of the firm.

Forthis business to thrive in the motor manufacturing industry, it willbe better to design an appropriate value chain. Specifically, mybusiness will get access to the raw materials that we will use inproducing the cars. I will employ the Porter’s ideas in designingthe value chain by dividing it into primary and support activities(Arline, 2015). In the primary activities, I will first stress on theinbound logistics by coordinating with the suppliers of the rawmaterials. Secondly, the operational systems will help change inputsinto outputs. Thirdly, the outbound logistics will ensure that thecars are delivered to the customers appropriately. Fourthly, thesales and marketing strategies will be fundamental in persuading thecustomers to buy my products. Lastly, we will offer specifiedmaintenance services after the purchase of our cars.

Onthe other hand, the support activities will give a backup to theprimary ones in ensuring that they run smoothly. They will includethe issues of procurement, how well the human resource will bemanaged, the use of technology, and the infrastructure of the firm toensure that the daily operations are maintained.

TheType of Budget to Implement

Thefirm will be handling a range of activities that are directly relatedto our core business. I have to be aware of all the individualbudgets that my firm should maintain to do the proper recording ofthe all the revenues and expenses of the institute. This is the onlyway I will be able to determine the performance of the firm in agiven financial year. In this case, therefore, I will implement amaster file.

Mostof the present budgets are not static and can be reviewed anytimewhen the need arises (DuBrin, 2012). In considering the budget, Iwill first look at the possible errors that may have been committedpreviously. Secondly, I will study the new data to the firm and itspotential effect on the budget. Thirdly, there are those changingconditions like the political and economic that can affect the budgetpositively or negatively. I will study them and make the necessarymodifications. Lastly, in situations where I may consider modifyingthe organization plan, this may have an effect on the previouslyprepared budget. I will scrutinize the effect and make the revisionsto the master budget.

SpecificBenchmarks and their Benefits

Toensure that the firm performs in the market, I will compare it withthe other companies using specific parameters. First, I will use thebest practices that are employed by the best performing businesses inthe motor vehicle manufacturing industry. These methods will enablemy firm to do the necessary amendments to boost our sales as well asreaching a wide number of customers. Secondly, the informationtechnology benchmarking will give an insight of what otherenterprises are doing concerning the data processing and end-usersupport among other issues. My business will benefit from thisstrategy because we will employ the modern and most recenttechnologies to make our cars marketable. We will carry out thenecessary modifications where necessary. Thirdly, applicationbenchmarking especially the development and maintenance programmingwill be considered as well. They will facilitate the determination ofdifferent costs, analysis of the market competition and also thesetting of goals. The firm will take advantage and ensure that allthese are done effectively. Lastly, I will look at the strategybenchmarks to study the methods employed by different businesses thatare recording the highest sales and revenues. These strategies willhelp my firm make the necessary changes where we have not done to theexpectation so that we can be at least at the same level or close tothe leading companies in the industry.

TheCosting System to Implement and Its Challenges

Inmy business, I plan to apply the process costing system. This methodwill work best because the corporation will have differentmanufacturing processes of which there are both direct and indirectcosts attached to them (Horngren, Foster, Datar, Rajan, and Ittner,2015). Together with the organization management, I will be able toallocate the costs to the particular process where they belong.Similarly, we will ensure that the expenses in each process arecompared from one period to another so that we can trace the sourceof the differences.

Theapplication of this costing process is full of challenges. First, ituses the statistical calculations in record keeping instead of actualinputs this can be solved if the real data will be used whilepreparing the records of the firm. Secondly, the use of this systemgives rise to cost errors in the process of manufacturing, toovercome the obstacle the direct allocation is done whileascertaining the expenses in the specific production processes.


Arline,K. (2015). Whatis a Value Chain Analysis?Retrieved from August 31, 2015

DuBrin,A. J. (2012). Essentialsof Management.Mason, Ohio: South-Western/Thomson Learning.

Horngren,C. T., Foster, G., Datar, S. M., Rajan, M., &amp Ittner, C. (2015).CostAccounting: 2015 custom edition(15th ed.). Upper Saddle River, NJ: Prentice Hall-Pearson.

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