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Unit 2 - Using Budgets

A budget is an agreed plan establishing, in numerical or financial terms, the policy to be pursued and
the anticipated outcomes of that policy.


They provide direction and coordination
-They ensure that spending is geared towards the aim of the business rather…

Page 2

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- An excessively high income or revenue budget may demoralise a manager who cannot achieve
Savings may be sought that are not in the interests of the firm
- For example, to keep within a budget, a buyer may purchase cheaper materials that will
lower quality of the…

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Variance Analysis:
An important aspect of budgeting is monitoring and reviewing the actual outcomes in comparison
with the budgeted figure. Differences between budgeted and actual figures are known as variances.
Variance analysis is an essential element of budgetary control


Variance analysis - The process by which the outcomes of…

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Calculate Wild Side Ltd 's profit variance for January ­ March 2013 and state whether it

was adverse or favourable

June 2012 ­ Q1b

Examine the possible consequences for TT Ltd of delegating budgets to site managers

at each of its 28 sites

January 2012 ­ Q2a

Calculate the profit…


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