- 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.
- 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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