Impact of Sales and Production Budgets on Profitability; A case study of Nepal Telecommunication Company and Nepal Electricity Authority

Abstract

A budget is an accounting tool that sets the costs and revenues goals for responsibility centers within an organization and also a measurement tool for control, coordination, communication, performance and motivation. Thus, dissemination of knowledge about budgetary goals should be carefully planned by upper management and understood by members of organizations so that they can implement an effective budget. The purpose of this study was to analyze the impact of organizations’ sales and production budget on performance management and decision making. The research used convenience sampling procedure to draw the sample. And the samples are 2 public service enterprises operating under public service utility of Nepal throughout 3 public enterprises. This research examined the present conditions and practices of NTC and NEA organizations relating to production and distribution of the services and electricity in the country. The research also tries to assess the impact of sales and production budget on profitability of NTC and NEA organizations. The research has been used primary as well as secondary data. The research has been followed with descriptive and analytical approach was used. A structured questionnaire was used to collect primary data from the respondents which were analyzed by simple percentage and statics tools. According to the primary data, the study also revealed that there is an impact of sales and production budget on profitability. It can be concluded that, general, the sales and production budgeting practices were still traditional perspectives because of lack of expertise, lack of coordination to staff & department and nature & size of the business. Based on the result, the study recommended that, to achieve the targeted growth rate in sales revenue and production, NEA and NTC should make realistic forecast. Sales and production forecasting should be made after analyzing all variables that affect the sales and production. The study also recommended that organizations shall utilize its optimum capacity by importing the modern technology around the world and by making a group of effective management.