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Implementation of a company's strategic plan often begins by determining management's basic expectations about future economic, competitive, and technological conditions, and their effects on anticipated goals, both long-term and short-term. Many firms at this stage conduct a situational analysis that involves examining their strengths and weaknesses and the external opportunities available and the threats that they might face from competitors.

After performing the situational analysis, the organization identifies potential strategies that could enable achievement of its goals. Part of this process involves business managers creating budgets to plan for future operations, create benchmarks to measure progress, and maintain necessary accounting controls.

A.The majority of literature that has used examples to describe a master budget have been limited to manufacturing companies. These companies tend to have comprehensive operating budgets and therefore serve as a good starting point in developing a master budget. However, budgeting is equally vital in all types of businesses, manufacturing as well as non-manufacturing organizations.

Required:

Clearly discuss what operating budgets look like for merchandising, service, and not-for-profit organizations. (13 Marks)

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