Chapter 16, AQA Buss2

chapter 16 card

HideShow resource information

Benefits of Using Budgets

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

Benefits: 

* Direction and Co-ordination 

* Motivation

* Improve efficency 

* They asses forcasting ability

1 of 5

Drawbacks of using budgets

Drawbacks:

They are difficult to monitor fairly

Allocations may be incorrect

*Savings may ne sought that are mot in the intrests of the firm 

*Changes may not be allowed for wen a budget is reviewed

2 of 5

Features of Good Budgeting

Good Budgeting:

* Consistent with aims of the business 

*be based on the opinions of as many people as possible 

*set challenging realistic targets 

*Monitored at regular intervals

*be flexible

3 of 5

Smart Target

SPECIFIC

MEASURABLE

AGREED

REALISTIC

TIMED

4 of 5

Variance Analysis

Variance analysis - the process by which the outcomes of busgers are examined then compared with the budgeted figures. The reasons for any differences are then found.

Favourable variance - when costs are lower than expected or revenue is higher than expected. 

Adverse variance- when costs are higher than expected or revenue is lower than expected

 VARIANCE = BUDGET FIGURE - ACTUAL FIGURE

5 of 5

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all resources »