Task 3 C and D
Budget - is a financial plan for the future concerning the cost and revenues of a business. However, a budget is about much more than just financial numbers.
Budgetary control is the way by which financial control is used within an organization.
Budgets for revenue/income and expenditure are prepared in advance and then compared with actual performance to establish any variances.
Managers are responsible for controllable costs within their budgets and are required to take corrective action if the adverse variances arise and they are considered excessive.
Cost control – if costs are not measured by a company then their profits will be adversely affected, therefore budgeting is one way to control cost as it gives an business an
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You need the right information about what everything about costing is to be able to work out whether you are making or losing money in the process.
Task 3 – F
It’s important for EDSA Shangri-La to manage all its resources and control its budgets to be successful. Managing resources and budgets gives EDSA Shangri-La more structure and stability leading to high performance and success. If resources and budgets are not controlled then many problems could occur for EDSA Shangri-La leading to bad performance and failure
Strategic planning
The connections between planning, budgeting, costing and performance measurement
The structures of budgetary control
Cost analysis: fixed versus variable costs direct versus indirect costs; traditional costing and activity based costing
The part of full costing and contribution margin
Advantages and disadvantages of budgeting
Reasons why budget needed to control.
It helps you keep your eye on the prize A budget helps you figure out your long-term goals and work towards them. If you just drift aimlessly through life, tossing your money at every pretty, shiny object that happens catch your eye, A budget forces you to map out your goals, save your money, keep track of your progress and make your dreams a
27. A budget is a specific plan of how a person or family will spend their money.
The budget is a plan of how to spend available funds wisely, and entails a list of all expected revenues and expenses. The budget is compiled annually and marks the beginning and end of the fiscal year. While the primary burden of the budget lies with the finance department, it is the responsibility of all faculty affected by budgetary practices to provide insight into the projected financial future of the school. The goal and evidence of a successful budget is to have the actual numbers of the financial year equal or come close to the estimated
This paper provides a brief presentation of Activity-Based Costing methodology, how is used as well as its short comings.
Budget is a planned outcome of the future - defined by your plan that your business wants to achieve.
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
By linking cost management efforts to budgeting, companies improve the quality of information available for managers to use in developing their budgets. Accurate cost information is fundamental to budgeting. Companies that use accurate cost management techniques and provide budget developers with ready access to cost information improve both the accuracy and the speed of their budget process.
A budget is a plan on how to meticulously and effectively disperse your income prior to spending it. It’s a tool used to guide your financial decisions (Ramsey, 2009 & Solin 2012). Regardless money will be exchanged for goods and services, whether you utilize a budget or not. On the other hand, remaining diligent in monitoring the ins and outs
We will examine the given data from the case and compare the unit costs from the company’s current costing system (traditional costing) and from activity-based costing. We will also highlight other qualitative data in consideration with the numerical factors that may result to a significant change on our recommendation.
In conclusion, every major company in the world uses budgeting and there is a good reason for that. It is an important component of financial success. Budgeting makes easier to achieve financial goals. It keeps track of all expenses and help to avoid crisis. It also helps companies to control their growth and provide them with realistic idea where business is going.
Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.
Budgetary control is part of overall organisation control and is concerned primarily with the control of performance. The use of budgetary control in performance management has of late taken on greater importance especially as a more integrative control mechanism for the organisation. Discuss.
C. T. Horngren, A. Bhimani, S. M. Datar, G. Foster (2005), 'Activity-Based Costing', Management and Cost Accounting (Prentice Hall Europe), 345-363
Through the use of budgeting as a system of organisational control, perhaps the most effective benefit is the system of control itself. Senior managers can use information involving planned performance and actual performance to establish a basis of control. This control will allow senior management to employ a technique upon junior management known as management by exception. This involves senior management spending most of their time monitoring the staff or activities that have failed to meet their budget. In doing so, the senior management will save time because they will not have to deal with those who are exceeding performance expectations. Furthermore, this technique also allows junior managers to practice self-control. They will be able to assess themselves in order to find out why they are under performing and take the necessary steps to correct what they are doing wrong.
5. The success of budgetary control depends upon the support of the top management. If there is lack of support from top management, then this will
Budget and budgetary control practices though very essential to meeting organizational goals, are mostly hastily and improperly prepared. This eventually leads to unfulfilled budget and budgetary control practices.