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Business Budgets

Unit 2

Benefits of using Budgets

They provide direction and coordination they ensure spending is focused towards
the aims of the business, rather than individual.
They Motivate the staff Mayo and Herzberg say that teams and individuals are
more encouraged by responsibility and getting recognition when they meet…

Page 2

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The process by which the outcomes of budgets are examined and then compared
with the budgeted figures. The reasons for any differences (variances) are then

Calculating Variances

Formula : variance= budget figure actual figure

A favourable variance is when : actual revenue is greater than budgeted revenue, actual


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