Introduction:

Buns Bakery has initiated its business operations as an average sized regional bakery primarily offering three product including fresh bread, breakfast muffins and chocolate chip cookies to both convenience and grocery stores. The bakery has gained exceptional popularity,so it has contemplated to expand the business out of the local region.

The Dilemma:

The founder and CEO of the bakery has been pondering to finance the business operations from the venture capital firm with the long term growth potential, thereby allowing the bakery to flourish and grow. Due to the increased demands of the product being catered by bakery, the CEO Andy Griff has been seeking investments from the venture capitalist company. By utilizing money received from investors, the company would meet the growth targets for the next years. The assessment team of Venture Capital Company has been asking the founder to provide the proforma financial statements as well as master budgets because by evaluating the company’s earnings per share, profit margin and cash flow from business operations, the venture capital company would ease in making decision to invest money.

In addition to this, after putting all budgets together, it has been realized by the company that it has been experiencing financial trouble in respect to the cash flow from business operations, profit margin and earnings per share. It is significant for the company to address the issues in order to secure the investment from the venture capitalist, also the company would be able to expand the roots of business in overseas and broader markets.

Buns Bakery Case Harvard Case Solution & Analysis

Part A

Master Budget Analysis:

In order to develop master budget to be presented to the venture capitalist, the numbers being presented in the given case study have been shown in the excel file under the name of data input. In order to critically evaluate in detail that which departments of company have been spending money and which departments are generating revenue for the company, this can be done by assembling the master budget(Churchill, 2017).

In addition to this, the individual departments of company would be able to determine that where they could increase the profits while reducing the cost through analyzing the budget. This can further be understood through example; suppose in a production department, it is ordered by head chef to switch to the just in time (JIT) production, because this would reduce or eliminate the cost of the raw material to some extent. The similar areas might also be overlooked by similar departments in a company for further improvement by looking at the budgets. Factually, the process of budgeting would help the employees who have been committed to the company in its mission to achieve the common objectives through combined efforts in finding ways to improve the company’s financial state, not only this but, there would be a likelihood of securing the investment as well (Karmarkar, 2017)

Evidently, the budgeting process would quantitatively describe the projected future operations of Buns Bakery as the process of budgeting is an interlinked set of plans..............

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