Forecasting and the Budget Process

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What are four variables used in the forecasting portion of the budgeting process? What is the danger of forecasting based on history alone? How can you create a meaningful forecast that reflects the fact that business conditions are always changing?
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Please refernece: http://www.communityconsultinggroup.org/bsa/Financial%20Forecasting,%20Planning%20and%20Budgeting.pdf

A budgeting process generally follows four steps:

Step 1: Preparing the budget.

This activity involves all decision factors (budget owners and budget management) to determine what tasks have to be accomplished and what resources are needed for the next period of time. The up-down and down-up communication is used. Forecasting the figures plan and budgets occur at different organizational levels and functions.

Step 2: Assembling the budget

The individual budgets have to correspond to the organization’s aims and objectives, to be correlated at each level of …