Question

Assume that you are asked to prepare a master budget for one of the products (name the product of Sony Company), what are the (internal/external) factors that you will be considering? Justify your response

Answer 1

The internal factors which are needed to be consider are :-

A. Financial resources are one of the leading factors which had a major impact on almost Every key decision in the business. So before preparing a master budget a budget maker have to see whether they possess sufficient resources or not.

B. Technical expertise is another factor which affect the master budget of a corporate. As it is important to know whether the company uses capital intensive or labour intensive technique of production.

C. Management expertise in this it should be seen whether the management of a company is efficient enough to take decision on time or not. Whether they are able to grab the opportunities available in the market.

B. External factors which affect the budget decision are:-

A. Market research as it is important before making budget or producing goods that what are the needs of the customers and only after that decision related to a product can be taken

B. Availability of raw material is a big factor which may hamper the production system and can affect the budget of a corporate. As a budget maker a person should take Care of the availability of raw material in the market.I.e, whether it is easily available or not.

C. Demand of product in the economy is sufficient enough to employ resources or not.