RUNNING HEAD: DEPARTMENT BUDGETS

Huffman Trucking: Department Budgets

Team B
FIN/486: Strategic Financial Management
August 11, 2014

Department Budgets
Department Budgets
Upper management is not solely responsible for reaching a companys financial goals. A

successful company utilizes budget across each department and has people in position to oversee
each department. Although senior management and the Chief Financial Officer will ultimately
approve the budget with the board of directors, it is a team effort to create and follow a budget
that is sensible and achievable. The following memorandum will enable all members of the
company the ability to see and help achieve the goals that are set for the upcoming years.
Success is dependent on all management levels working together to achieve maximum results.
Memorandum to All Departments
TO:

All Departments

FROM:

Finance Department, Team B

DATE:

August 11, 2014

RE:

Department Budgets: Huffman Trucking

______________________________________________________________________________
Team Players Role in Strategic Planning
A good strategy turns great when those executing the plan work together in
accomplishing a profitable goal. The following identifies the individuals and their roles in
creating a profitable strategy for Huffman Trucking. Jennifer Turnbull is the creator of the
financial spreadsheets for Huffman Co. managers. These spreadsheets will aide our team when
evaluating and creating our strategic plan. Berthel Johnson is creating the instructions for
Huffman managers when creating budgets. The new budgets formatting will aide managers by
eliminating redundancies and adding a cash flow budget. The cash flow budgets will aide

Department Budgets
individual Huffman trucking locations to better time the flow of cash in and out of the location.
In charge of forecasting for Team Bs strategic plan is Kimberly England. Kimberly has put
together a spreadsheet demonstrating the increase in expenses at six percent and an increase in
revenues at twelve percent. Her results show that net income would have doubled from 2012 to

2013. Richard Moore is presently in charge of human relations. Team B has composed a present
and future assessment of Huffman Trucking and is pleased to present this information to you.
Instructions
Experienced project managers rely on a number of powerful tools to bring their projects
in on time and under budget, including not only specialized project management software but
spreadsheets as well which is an imperative tool.
In many instances, a project starts with an end goal but without a road map to reach it.
This requires project managers to create a project plan to define the scope of the project.
Managers need to know the exact desired outcome; a deadline; their access to resources, such as
staff, contractors and equipment; and the amount of money available for the project. After
mangers have this information, the need to generate a plan, obtain approval and start creating the
budget. A budget is not just the total amount of money available but how and where you will use
the dollars. Each part of the project should be broken down into sections, job and equipment to
better identify cost on all levels. There is no better way of doing outside of a budgetary
spreadsheet. The most effective way to meet a budget is to estimate spending as close to reality
as possible. In some cases, you wont know what things cost until you start pricing them or until
one or more phases of the project are complete. For the most accurate budget possible, meet with
everyone involved in the project for their input into costs. Meet with vendors, suppliers and other

Department Budgets

experts who can help the project manager accurately identify costs in areas where you dont have
staff or co-workers to help you.
A very simple budget can be created using a simple spreadsheet or robust financial or
project-management software, create a budget document. List the expense categories, anticipated
expense numbers and dates, if you want to track spending by timeline. Consider breaking the
budget into different functional areas so you can keep track of spending by parameters such as
materials, labor, marketing or equipment. Create a document that automatically updates the totals
as you enter actual results. For example, as you enter labor costs, the document should show how
much youve spent on labor, how much you have left, the percentage of the budget youve spent
and where the money came from if you are using labor from different departments. A spreadsheet
is a great way to stay account for all cost seen an unseen, if used I will be beneficial.
Sincerely,
Team B, Finance Department

Department Budgets
Operations Budget Spreadsheet
All departments will utilize the following spreadsheets in order to properly prepare their
departments budget.

Cash receipts
Less: Cash
disbursements
Net cash Flow
Add: Beginning cash
Ending cash
Less: Minimum cash
balance
Required total
financing
Excess balance

Sales Cash Budget

Quarter 1
Quarter 2
$0
$0

Cash receipts
Less: Cash
disbursements
Net cash Flow
Add: Beginning cash
Ending cash
Less: Minimum cash
balance
Required total

Quarter 4
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Sales
Informatio
n
Sales Growth Assumptions:

Sales in
units:

Quarter 3
$0

2010
Total
969,240

0%

per year

2011
Total
1,109,295

2012
Total
1,109,295

Inventory Cash Budget

Quarter
Quarter
Quarter
1
2
3
$0
$0
$0

Quarter
4
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

0
$0

0
$0

0
$0

0
$0

2013
Total
1,109,295

Department Budgets
financing
Excess balance

$0

$0

$0

Maintanance Ending Inventory

0%

$0

Production Information:
of next year's production
needs

2011
Ending
Inventory
0
0
0
0
0
0

Purchasing Cash Budget

Quarter 1 Quarter 2 Quarter 3
$0
$0
$0

Cash receipts
Less: Cash
disbursements
Net cash Flow
Add: Beginning cash
Ending cash
Less: Minimum cash
balance
Required total financing
Excess balance

Quarter 4
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

0
$0
0
$0

0
$0
$0

0
$0
$0

0
$0
$0

0
$0
$0

Direct Material Informaiton:

Units
Needed
Travel
0
Postage
0
Subscriptions
0
Seminars
0

Cost per
Unit
$0.00
$0.00
$0.00
$0.00

Total
Cost
$0.00
$0.00
$0.00
$0.00

$0.00
$0.00

$0.00
$0.00

Contracts (Smith
Consulting)
Office Supplies
Accounting Cash Budget

0
0

Department Budgets
Quarter
1

Quarter
2

Quarter
3

Quarter
4

Cash receipts
Less: Cash
disbursements

$0

$0

$0

$0

Net cash Flow

Add: Beginning
cash

$0

$0

$0

$0

Ending cash
Less: Minimum
cash balance
Required total
financing

$0

$0

$0

$0

$0

$0

$0

$0

Excess balance

$0

$0

$0

$0

Selling and Administrative Expense Information:

Variable S&A for Short
Hauls:
$0
Variable S&A for Long
Hauls:
$0

Debt
Information:
Amount owed to
bond

$0

Interest rate on
bond

0%

Prior year
purchases
Actua Act
l
ual
Total
Purch
Paid
$40,8
43

$1

per
shar
e

Fixed S&A Expenses per

year:

Advertising

$0

Executive Saleries

$0

Property Taxes

$0

Office Rent

$0

Cleaning Fees

$0

Other Costs

$0

Line of
Credir
Max:
Interest Rate on
LoC:

$0
0%

Common Stock
information:

Shares of stock
outstanding:

at

Miscellaneous
Information:
Cash Flow and Investment
Information:
The company's tax
rate is:

Requirements

Minimum Cash Balance:

$0

Dividends
Required Dividend Payment each
yr:

$0

Planned Expansion (Purchase of Equipment)

Budgeted Purchases in Current Year
2011
$0

Last year the company

paid taxes of:
Amount of last year's tax
pay to this year:
Total tax to prepay
this year:
Payment due each
quarter:

0%
$34
,88
7
0%
$0
$0

Budgeted
Payments in
Current Year

$0

Department Budgets
Production Cash Budget
Quarter 1 Quarter 2 Quarter 3
$0
$0
$0

Cash receipts
Less: Cash
disbursements
Net cash Flow
Add: Beginning
cash
Ending cash
Less: Minimum
cash balance
Required total
financing
Excess balance

Quarter 4
$0

0
$0

0
$0

0
$0

0
$0

0
$0

0
$0

0
$0

0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Direct Labor
Information:
Hours of short-distance
rout:
Hours of long-distance
rout:
Wages per Hour:

8
16
$32.00

Production
Information:
Short distance trucking
Long distance trucking

0%
0%

Information Technology
Operating Budget - FY04
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Compensation
Wages

38,333

38,333

38,333

38,333

38,333

38,333

38,333

38,333

38,3

Benefits

8,625

8,625

8,625

8,625

8,625

8,625

8,625

8,625

8,6

Total

46,958

46,958

46,958

46,958

46,958

46,958

46,958

46,958

46,9

Travel

2,500

2,500

2,500

2,500

2,500

2,500

2,500

2,500

2,5

Postage

150

150

150

150

150

150

150

150

Subscriptions

2,500

100

250

Seminars

$3,000

$3,000

Department Budgets

Contracts (Smith
Consulting)

$ 1,505,333

$ 1,505,333

$1,505,333

$1,505,333

$1,505,333

$ 1,505,333

$1,505,333

$ 1,505,333

$ 1,505,3

Office Supplies

Total

$ 1,557,516

75

75

$ 1,555,116

75

$1,558,016

75

$1,555,016

75

$1,555,266

75

$ 1,555,016

75

$1,555,016

$ 1,558,016

Forecasted Sales
In the upcoming two years, management is forecasting a twelve percent increase in
revenues. With an increase in revenue, there will be an increase of six percent in the operating
expenses for the company. As the chart depicts, the revenue increase in revenue will increase the
bottom line significantly even with the increase in the operating expenses.
Forecasted Sales
2011

2012

2013

1,109,295
1,109,295

1,260,563
14,500,000
15,760,563

1,658,635
35,500,000
37,158,635

406,191
318,737
117,670
138,140
19,033
11,995
3,009
1,014,775

432,118
346,453
127,902
150,152
20,688
11,759
3,271
1,092,343

459,700
376,580
139,024
163,209
22,487
11,529
3,555
1,176,084

Operating Income From Continuing Operations

94,520

14,668,220

35,982,551

Interest Expense
Tax Expense

466
34,887

507
37,921

550
41,218

Net Income

59,167

14,629,792

35,940,783

Revenue
Existing Operations
New Operations
Total Revenue
Operating Expenses
Salaries, Wages & Benefits
Fuel Expense
Operating Supplies and Expenses
Purchased Transportation
Operating Taxes & Licenses
Insurance & Claims
Provision for Depreciation
Total Operating Expenses

Conclusion

75

$ 1,555,3

Department Budgets

10

The information that has been provided to each department is sufficient in planning
upcoming budgets for the next year. The roles and instructions have been set out accordingly and
will allow department managers to work with their staff to create and manage effective budgets.