Budgeting and strategy
A Kraft Foods UK case study

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Page 4: Constructing an expense budget

Each cost centre budget is seen as part of an overall plan designed to meet company objectives. Constructing cost centres' individual budgets involves detailed consultation about company objectives, marketing objectives and relevant income and expense projections. These can be brought into line and match changes in the external business environment.

Using this as a basis it is a reasonably straightforward exercise to calculate other expenses, including the number of people (and their remuneration packages, such as pension expenses, national insurance, travel costs) required to run a particular part of the business.

In the modern business world the rate of change is such that it is impossible to have a clear picture of the future. Inevitably it takes time to build the 'big picture' from lots of small, shifting scenarios relating to individual cost centre budgets. Budgeting may be difficult, but it is essential for a business to stay in control and 'ahead of the game'.

Kraft Foods UK | Budgeting and strategy