Budgetary Plan for an RV Company

Budgetary Plan
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Company Overview
Logan's Luxury Company will manufacture and sell motorhomes in the United States and Canada. The company’s mission is to provide luxurious and affordable motorhomes to customers seeking lasting memories camping. Its vision is to be the leading provider of recreational vehicles in the world. Logan’s luxury RV will sell towable and motorized RVs, utility trailers, cargo trailers, pontoon boats, and buses, as well as modular homes, Atlantic homes, park models RVs, and Excel homes in North America. It will also offer construction services to install factory-built homes and engage in transporting manufactured recreational vehicles and homes.
With an estimated budget of 800,000 USD and an annual revenue of 10 million USD, Logan’s Luxury RV is expected to be one of the largest brands in the world. During its five years of operation, Logan’s will build approximately 40,000 homes and 22,000 RVs, most of them travel trailers. Logan’s Luxury RV remains committed to offering the best products at affordable prices. One of its superior features is that it provides accessibility-enhanced models, the RVs available for everyone. Logan's can be affordable and luxurious depending on one's budget and preferences. Its costs may be higher than the average camper, but the motorhomes' interiors are furnished with glamor and a practical elegance that is difficult to find elsewhere.
Logan’s’ impeccably crafted interior designs set starting prices at 100,000 USD, making it affordable for individuals looking for a classier side of mobile living. The company has earned a reputation for uncompromising integrity in its business relationships with customers who live in Logan's-built homes and enjoy Logan's-manufactured RVs. The company's sharp ingenuity and honesty guarantee customers a timeless function and reliability throughout their travels. Another feature that distinguishes Logan’s from its competitors is better customer service. The company has a reputation to maintain. For that reason, it prioritizes customer satisfaction from the time of purchase to the point of ownership.
This company will primarily target millennials between 30 and 45 years, event hosts and attendees, and tourists. Millennials have embraced the camping idea. Research shows they represent about 41% of campers (Weygandt et al., 2020). Event hosts and attendees also use RVs frequently. Most of today’s social events include venturing outside the home. Many cities around US and Canada host music festivals, concerts, sports tournaments, and plays. They are also destinations for bachelorette parties, weddings, and family reunions (Fox et al., 2020). These activities require temporary housing. Logan's Luxury will target these individuals by working with event planners and organizations hosting the events to market and sell its products.
Budget Planning and Controls
The success of any business is based on dynamic managerial performance and efficiency combined with practical budget planning and proper implementation. Under a competitive environment, a firm's ability to generate adequate revenue and competency in planning lies in the quality of its budgeting and budgetary control (Weygandt et al., 2020). It is expected in this research that the findings and recommendations will demonstrate how the budgeting process provides for coordination and helps managers make informed financial decisions. When designing a project, there is often an expectation of how much it will cost or how much time it will take. When estimating the project without knowing much about it, that estimate becomes a rough order-of-magnitude estimate (Pearce & Wu, 2018).
Budgeting is the process of quantifying the plans of a project or an organization to enable it to achieve its objectives in the defined period. The process generates budgets used for control, performance evaluation, and decision-making. A budget provides a focus for the business, facilitates control, and aids the coordination of organizational activities (Watt, 2014). Planning is attained through a fixed master budget, while control is exercised by comparing actual costs with a flexible budget to identify variances that need corrective measures (Watt, 2014). Budgetary planning and controls effectively ensure that companies utilize available resources to achieve their financial plans.
Budgetary control is a management-by-exception example, where attention is directed to a few items that do not progress according to the plan. It provides a framework for monitoring a company's progress toward achieving its objectives (Weygandt et al., 2020). This process relates to variance analysis. It provides a general means for regular departmental appraisal and overall performance. Every business is required to make a budget to ensure smooth operation. One of the critical functions of budgeting is coordination. According to Watt (2014), budgeting assists in coordinating business activities and functions. Another function is planning. It highlights the direction a company intends to take in the short run.
Budget planning and controls involve three significant phases: planning, budgeting, and forecasting. In the planning phase, the RV company executives will discuss and decide on the corporation’s financial goals for a specific period. In the budgeting phase, the organizational managers will prepare a company's forecasted expenses, earnings, debts, and revenues. Forecasting entails using the company’s historical financial data and the present state of the market to estimate the value of the business or the profit it is likely to make in the short and long run (Pearce & Wu, 2018).
Budgeting and control also aid in performance evaluation. With these functions and benefits, one can safely state that budget planning and controls are significant tools for maximizing overall business profits (De Baerdemaeker & Bruggeman, 2015). Before establishing An RV Company, preparing an achievable budget with reasonable estimated costs is necessary. Project managers must ensure that the business operates within the budget by attaining favorable variance. A favorable variance exists when the budgeted cost exceeds the actual cost (Watt, 2014). It means the project operated within the budget, and the business generated more revenue or profit than initially expected. Favorable variance can lead to increased efficiencies in manufacturing, higher sales, and cheaper material costs.
Some substantial budgets to be included in the start-up include sales, production, and cost of production. As noted, Logan’s Luxury RV Company will deal in the manufacture and sale of motorhomes. These services require the budgets mentioned earlier. The sales budget forecasts the quantity of the products sold and their prices during the budget period (Fox et al., 2020). This budget will be prepared by the company’s sales executives taking into account relevant factors like market conditions, advertisements and promotions, consumer behavior, pricing policy, type of product, competitors’ strengths and weaknesses, production capacity, type of product, nature of business, government restrictions, and company objectives.
The production budget will be prepared based on the sales budget, considering the stock levels to be maintained. The company’s forecasted output will be shown in this budget. The budget determines the activity level of the business and facilities planning to maximize efficiency (De Baerdemaeker &...