Task 1
1.    Introduction of Performance Management
·        Briefly discuss the concept of incremental budget

Incremental budgeting is a significant part of management accounting. That is all based on the premises of different kinds of small changes that are made in budget to attain a new budget. Incremental amounts are added in the new budgets and shows that the specific figures that are increased in new budget. These budgets are used for current fiscal years, and base for the coming fiscal year said to allocate the budget. Incremental wasting is considered as wasting that is used to make budget on the basis of previous record. It is considered as helpful to estimate the cost and allows the managers to emphasize on major areas of interest rate that are required The problem with the incremental wasting is that it is based on next period profit that is not stable and accurate to estimate before the time. The failure of incremental vesting is depend upon the success and transformation methods that are used to build the continuous improvement in the business. It replaces the traditional budgeting methods where decision making was done according to traditional measures that are with the records.

 Income statement which team is so prepared with the assumed values that are assumed by management of the company on the basis of the previous record. It is based on the future assets and future liabilities of the company and could help the business to evaluate the better implementation of decision making and other factors that are necessary to take into consideration in the financial decisions.

 It is assumed that all the departments are operating with the same efficiency and according to the current level of expenditure in the next year. Is not based on fixed formula and approached him. Therefore it starts on the assumptions of the expenditure and for according to the previous air and assumed for next year (Novikov, et al., 2016).

·        Briefly discuss the preparation of income statement budget

Income statement is considered very important in earning and expenses for a specific period of time in the financial years and to it is considered to predict income for the business. The best state income statement is a significant part of business financial planning up as it is a document that is based on the balance sheet and it could be helped to determine future assets and future expense of the business. (Dooley, et al., 2007) It could help to evaluate the future performance of business. The basic purpose of this earth based rate income statement is to analyze the performance of business and to determine the future needs and wants of business. The preparation of a state income statement is including sales, purchase and administrative expenses of the company. The profession of income status statement as budgeted is considered with the help of forecasting, a forecasting is considered strategic management. The future values of budget preparation also helpful in the profession of incremental budget with the help of these assumed values for the excel work are done to evaluate the net profit of the company.

It is prepared accumulated for the different Department of the company and goes with the financial data of a specific project of income statement is based on actual income statement including income cost of goods sold, stores, profit, operating expenses, and net income before tax and other revenue generated from the business (Nadeem & Ahmed., 2016).

2.    Financial Assumptions
·        Baseline data of Performance Management

The base line data explain what terms and conditions utilize in the company and what are the actual figures used in the company for calculating its profitability. It is necessary for the calculating the profit and its ratio of earning according to managing the expenditures of the production.  Cost of production is the sum of all fixed and variable cost that company consume during its production.

·        Incremental assumptions of Performance Management 

These incremental assumptions explain that which information is increase or decrease according to management decision that prepare in the budgets and determine the actual data. These incremental figures help the organization to measure its future expenditures and also determine how much the company wants to increase its income in near future after managing all the factors. These assumptions help the organization to manage its transactions and consider all the necessary actions that is required for generating effective revenue.

·        Evaluation of Performance Management:

The evaluation of income statement that is estimated on the previous record shows that the annual sales and volume of company is increasing with this specific percentage. As the expenses are increasing, so own sales price and sales volume also increasing that add net profit and increase profit for the company in next years. There are different elements in excel sheet that order depending upon calculation of sales, volume, sale, price, cost and other selling and admin expenses and the final sheet is concerned with the draws profit calculation and then net profit. The future values of budget preparation also helpful in the profession of incremental budget with the help of these assumed values for the excel work are done to evaluate the net profit of the company.

The income statements of the company is assumed for the next 5 years that shows assumed increase in the income and expanse of the company. All the earnings and expenses of the company is increasing according to the assumed rate of the current situation and based on the rate of current year 2019. As the sales volume is increasing 10% and other all elements in the given table are most likely increasing according to the given rate of the assumed values which shows the annual profits of year 2020-2024 (Omidi & Khoshtinat., 2016).

Task 2
2.    Prepare and complete the following statements:

Following is the detail of different statements. These statements are prepared on the basis of assumed data which is mentioned in task 1.

·        Budgeted Sales of Performance Management

·        Cost of sales budget

·        Selling and admin budget

·        Budgeted income statement

Conclusion of Performance Management

 At the end we can conclude that incremental budget is very helpful tool for the organization which help to provide a better estimation about the company and its production. When the company want to understand in clear way about its production and its profitability in most effective way and company working on specified basis then company prepare future budgets which help to understand that how to enhance the level of production and how much company have safe side for cover up its all the expenses and manage its production level according to market requirement. When the company is performing in effective way then its demand also increase and for managing its demand company must be increase its production level and also increase its sales. Incremental budgets and all relevant budgets help the organization to plan an effective production set up and provide a clear path for performing in the future and manage its production level to generate more profit in the future and  make strong position in the market.

References of Performance Management

Dooley, M. P., Folkerts-Landau, D. & Garber, P., 2007. Direct investment, rising real wages and the absorption of excess labor in the periphery. In G7 Current account imbalances: sustainability and adjustment University of Chicago Press, pp. 103-132.

Nadeem, M. & Ahmed., R., 2016. "Impact of Business Process Re-engineering on the Performance of Banks in Pakistan. Business and Economics Journal, 7(1), pp. 1-3.

Novikov, V. S. et al., 2016. "Re-engineering as the process of business adaptations.. International Journal of Economics and Financial Issues, Issue 6.

Omidi, A. & Khoshtinat., B., 2016. "Factors affecting the implementation of business process reengineering: taking into account the moderating role of organizational culture (Case Study: Iran Air).. Procedia Economics and Finance, 36(16), pp. 425-432.

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