← Lessons 05-Financial Management Techniques
Quiz
0 / 14 read
1. Introduction 2. Definitions of Key Financial Terms 3. Sources of Funds 4. Uses of Funds 5. Trading and Profit & Loss Accounts 6. Balance Sheet 7. Legal Requirements 8. Balance Sheet Terms and Ratios 9. Budgeting 10. Cash Flow 11. Cash Budgeting 12. Stock Control 13. Conclusion 14. Final Memory Checklist

9. Budgeting

  • Budget = financial plan for the future.
  • Revenue budgets forecast income; cost budgets concentrate on expenditure.
  • Good cost control requires realistic estimates and comparison of actual results with budget.
  • Calculate and monitor variances between budget and actual figures.
  • Investigate significant adverse variances and take corrective action.
  • Review budgets regularly so planned figures remain realistic.
  • Example in the material: drivers' wages were £26,500 actual against £28,000 budget, a £1,500 favourable variance (5.36%); tyres were £6,500 against £6,150, an adverse £350 variance (5.69%).