Property Management Budget Free Essay Samples & Outline
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Sample Essay On Budget
A flexible budget determines the various expenses on variable costs depending upon variances in actual income. It adjusts changes in the level of activity and is compared to the master budget after an accounting period has elapsed and any variances are noted and appropriate corrective measures are taken. This budget is constructed by first identifying all fixed costs and separating them in the budget model, ascertaining how the variable costs will change as the activity levels changes and designing a budget model where all fixed costs are kept constant and the variable costs are stated as a percentage of those expected from the expected activity level.
Flexible budgets are useful planning tools for managers since they show all the expected variable and fixed costs depending on the expected level of activity. This enables the managers to detect and correct any uncertainties that may occur as the accounting period proceeds. A flexible also budget gives managers a preview of the expected expenses which helps them in their planning process. It also helps in evaluating the performance of managers since the expected level of activity is predetermined. The performance of managers can, therefore, be determined as the accounting period proceeds, and an evaluation can be done. It also enhances budgeting efficiency when it is used to update a budget whose figures have not yet been compiled. This ensures that the budget is always updated, and any missing information is readily available (Boyabatlı & Toktay, 2015)
A flexible type of a budget is sometimes difficult to devise and implement. The process of constructing flexible budget can be complicated, and its administration can be hectic. In most instances, the services of an expert are needed in order to construct it. This kind of a budget also requires close monitoring in order for it to be effective which is a time consuming activity. A delay in the completion of an accounting period can also affect the operation of this budget since it has to be compared to the master budget after the completion of the period.
In short, although the article clearly points out that a flexible budget can be hard to develop and implement, its usefulness is evident and it contributes a great deal in the controlling function of managers. It is also a useful tool in performance measurement and budgeting efficiency. Business organizations should therefore incorporate their usage in their operations.
Boyabatlı, O., Leng, T., & Toktay, L. B. (2015). The impact of budget constraints on flexible vs. dedicated technology choice. Management Science.
Property Management Budget
The ability of a company to come up with an n accurate and all inclusive budget is critical for the attainment of high levels of performance in the end. Budgets act as plans for the business and the effective undertakings in the future will depend on the quality of the budgets that a company makes (Wiseman, 2010). For the purpose of this paper, the budget preparation will incorporate two Microsoft applications. The mathematical preparation will be made using the Microsoft excel while the explanations for the models will employ the use of the word processor application.
However, the managers are advised to make slides using Microsoft PowerPoint in case they are called upon to make any presentations during future meetings. This paper will act as a guidance for each of the property managers when making the budgets for each of the building under their management (Wiseman, 2010). Being a simple guidance for the managers, the information contained herein is not exhaustive hence the managers can make modifications on their respective presentations as they deem fit or as the situation may require. However, all modifications have to be justified.
All budgets will incorporate the administrative expenses section. This section will cover all the costs incurred in the normal operations of the business (Wiseman, 2010). Among the costs that have to be included in the budget include the payroll which is the summation of all the wages and salaries paid to the personnel involved in the management of the respective properties. Accounting fees also fall under this category. Treatment of audit fees will be different from the other elements in this section since the company policy is to carry out an annual audit. Therefore, apportioning the costs incurred in auditing to the respective months will be impossible. Other expenses that should fall under this category include legal fees, sundry expenses and any other expense that falls within the realm of the general management of the organization.
The second category that all mangers should include in the budgets is the property taxes. This is a requirement by law that all the property owners pay certain amounts in property taxes. Being the administrators for the respective property, it is the duty of the company to handle the property taxes payments. Payment of this type of taxes has to be done according to the stipulated timelines (Wiseman, 2010). Property taxes also depend on the value of the buildings.
Therefore, all the adjustments that may affect the value of the property either positively or otherwise have to be carried out in the right time in order for the correct amount to be paid in taxes. Property taxes that the managers have to pay particular attention to include are personal property tax and estate property tax depending on the nature of the property under the management of the organization (Donovan, 2006).
The budgets for each office block under the management of the company have to include the utilities involved in the maintenance of the buildings. Different building have different consumption of utilities hence the necessity of coming up with customized budgeting approaches. The tenants in the buildings will be eventually responsible for the utilities but the cumulative costs are billed to the owner of the buildings. The managers are advised to use the established worksheet for the calculation of the utilities (Banks & Giliberti, 2003). All budgets must have the budgeted amounts for the electricity, gas and waste management.
Most of the buildings under the control of the organization are public places. Therefore, third party insurance for any risk that may affect the members of the public is necessary. Casualty insurance cover is also called for in case the users of the building or any other person dies from working in it. Liability insurance cover estimates also have to be included in the budget to cover the any form of litigation liability from inherent dangers of the buildings to the people that frequent them or the other members of the public. However, in order for the management to reduce the costs incurred in the insurance of the buildings, it should consider the repairs and maintenance that can reduce or eliminate the hazards.
Repairs and maintenance is the other section for the budgets of all the properties under the management of the organization (Donovan, 2006). All budgets have to include the wages and salaries paid to the construction workers involved in the repair work for the organization. These are the wages that cannot be conveniently traced to a certain repair and maintenance activity. All budgets have to cover the projected repairs and maintenance expenses in the elevator sections and escalators.
Routine electrical repairs have to be budgeted for since they are the most recurrent types of repairs in the typical building (Banks & Giliberti, 2003). The refurbishment costs also fall under this category and they are costs incurred in the abnormal and often heavy repairs and maintenance. Occasional plumbing works should also fall under this category of costs albeit in small quantities since plumbing does not usually form a significant part of any buildings maintenance. All the figures in the budgets have to be in USD.
Banks, A., & Giliberti, J. (2003). Budgeting (1st ed.). Macquarie Park, N.S.W.: McGraw-Hill.
Donovan, S. (2006). Budgeting (1st ed.). Minneapolis: Lerner Publications Co.
Wiseman, B. (2010). Budgeting (1st ed.). New York, NY: Weigl Publishers.