Unit 17-Setting Budgets

Revision Cards on AQA Business Studies for AS

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Key Terms

Definition

  • Budget-Target for costs or revenue that a firm or department must aim to reach over a given period of time.
  • Adverse variance- Difference between budgeted/actual figures that is damaging to a firm's profit (e.g cost up/revenue down)
  • Criteria- Yardsticks against which success (or lack of it) can be measured
  • Delegated- Passing authority down the hierachy
  • Favourable variance- Difference between budgeted/actual figures that boosts a firm's profits (e.g. revenue up/cost down)
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A Grade Application- A Wiser Dragon (Setting Budge

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Issues For Analysis/Evaluation - Setting Budgets

Issues for Analysis

  • Variances are the key to analysing budgets. When identified, the question is 'why the variance occured?'.
  • Variance analysis identifies symptoms not the cure.
  • Budgets/Variances are really good for people in firm. They help achieve figures. 

Evaluation

  • Budgets are a management tool; they are only useful as how they are used.
  • Budgets can tell you a great deal about workplace culture. Are they imposed and used for control of employers.
  • Using budgets has both benefits/drawbacks.
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