Gathering Production Figures
For production data, the author again turns to past expenses as a way of setting future budgets, adjusting for the changes or variances one can foresee.
Gathering Historical Data
Ideally, a corporation will keep good records on past expenses, so these can be used as a basis for estimating future costs. Failing that (it doesn't exist or you can't get it), perhaps the budget estimates are on record? Failing that, you can get help from accounting to try to estimate the expenses.
Accuracy
The author uses a whole lot of words to suggest that you pay close attention to intervals when looking at past expenses: if you mistake a weekly cost for a monthly one, your budget is going to be way off.
There are also minor variances that come from bad practices such as estimation based on a 4-week month (which adds up to 48 weeks rather than 52); forgetting that employees have holidays, vacation, and sick time (so while there are about 260 week days a year, the average employee works only 222 of them); a retail operation may be open 12 hours a day (and need to be staffed for more than the 8-hour office work day); etc. These small variances can add up to a major one on the bottom line.
Evaluating Information Quality
Generally speaking, accounting records ought to be accurate, but they sometimes do not tell the full story. You'll know that a bill was paid for a certain item, but not how many units that bill represents. You may have to go digging through the invoices to get that information, or you may have to look at production records to estimate it.
Even accurate information is an accurate picture of past expenses. The prices of things (materials and labor) tend to go up over time, so historical data will need to be adjusted. There may be areas in which a "standard" adjustment is insufficient (gas prices rising more rapidly than prices in general), or there may be instances in which you can be more accurate in the change (when there's a hike in minimum wage).
Multiple Periods and Trends
Where possible, get more than just one period's worth of prior budgets ... get as many as possible. This will enable you to better identify trends over a longer period of time, or notice cycles within a year (or cycles that last longer than a single year). Having multiple periods will also enable you to see a high-low range where costs tend to fluctuate.