Re-cap Charlie wants to set up a chocolate factory. Organise the below costs in to fixed (indirect) and variable (direct) costs. Raw materials Telephone.

Slides:



Advertisements
Similar presentations
Accounting and finance Budgeting and variance analysis.
Advertisements

BUSS2.1 Using Budgets Finance Using Budgets Budgets This unit follows on from the study of budgets in Unit 1- Setting Budgets “ Budgets are for cutting,
Using Budgets AS Business Studies. Aims & Objectives Aim: Understand variance analysis Objectives: Define variance analysis Explain the causes of variance.
LESSON 6.
1 The Trading Profit and Loss Account Higher Grade Business Management 2009.
Start up money Capital“money invested by the owners” - it can be a substantial amount - limited to personal wealth (Sole trader/partner) - LTD/PLC can.
AS Business Studies Budgets Today you will know what a budget is. You will understand why budgets are set and you will apply this to the case study Unit.
IB Business and Management
IB Business and Management
This test consists of 10 questions designed to test your understanding of methods of budgeting The links provide you with a choice of answer, along with.
Budgeting - HL Only Learning Objective:
Unit 3 Accounts & Finance Budgeting. Learning Objectives Understand the importance of budgeting for organisations Calculate and interpret variances Analyse.
Setting budgets By the end of this unit you should understand:  the differences between income, expenditure and profits budgets  why businesses set budgets.
Re-cap Charlie wants to set up a chocolate factory. Organise the below costs in to fixed (indirect) and variable (direct) costs. Raw materialsTelephone.
Financial Management Back to Table of Contents. Financial Management 2 Chapter 21 Financial Management Analyzing Your Finances Managing Your Finances.
IB Business and Management 3.4 Budgeting. Learning Outcomes To be able to explain the importance of budgeting for organisations Calculate and interpret.
Basic Costing Homework Recap. Basic Costing Lesson 1 Chapter 1 - Introduction to basic costing systems.
224 Budgets AS Edexcel New Specification 2015 Business
Future Research Leaders Program Module 5 Financial, Resource and Risk Management.
BUDGETS Question 1 What is the purpose of a budget? An objectiveCheap commodity Excess money Plan that outlines costs and revenue.
F INANCIAL PERFORMANCE - BUDGETS AQA Business 5 D ECISION MAKING TO IMPROVE FINANCIAL PERFORMANCE The Government sets an annual budget. What is the purpose.
FINANCIAL PLANNING Notes. Financial Planning in Business Financial questions never go away… Beginning a Business Where will you get the money? How much.
Lesson 14. Topics Covered Business Costs Revenue Profit Expenditure Break Even Analysis Budgeting Cash Flow Forecast Profit & Loss Account Balance Sheet.
Year 13 Accounting Management Decision Making Budgeting.
Chapter HL BUDGETS. By the end of the chapter you should be able to...  Explain the importance of budgets for organization  State the difference.
AS_Budgeting. Lesson Objectives: What is budgeting? Know how budgets provide financial targets Describe the main budgets that apply to their selected.
/ Tutor: Salina Loum AAT Level 2 Basic Costing This Unit will be divided into 5 lessons:
Planning & budgeting 25 th November, 2009 Eva Stevens Community Accounting Plus.
LEARNING AIM B: Understand how businesses plan for success.
UNIT 7 Revision. Sources of Finance Source of financeWhat this source of finance is, it’s advantages and disadvantages….. Owner’s funds Retained profits.
Budgeting THE TIMES 100. What is a budget? A budget is a forward financial plan. Budgets can be drawn up for: Income Expenditure Profit Cash flow Output.
Topics Covered Business Costs Revenue Profit Expenditure Break Even Analysis Budgeting Cash Flow Forecast Profit & Loss Balance Sheet Maximising Profits.
Topics Covered Business Costs Revenue Profit Expenditure Break Even Analysis Budgeting Cash Flow Forecast Profit & Loss Balance Sheet Maximising Profits.
Unit 2 Business Resources Assignment 6 Date Set: 20 th April 15 Deadline: 4 th May 15.
National 4/5 Business Management
FINANCIAL RESOURCES MANAGEMENT
Bingo Budget Variance Favourable Adverse Profit Expenditure.
Understand the purpose of Accounting
Assignment 4 due in Friday!!
Good or bad? Actual income was £500 less than budgeted for the period.
AS Business Studies: Finance
(Oxford river). (Oxford river) What is a budget? A target for costs and revenue that a firm sets for itself and aims to reach over a given time period.
Topics Covered Business Costs Revenue Profit Expenditure
Draft Idea Presentation (put your team/idea title here)
GCSE Business Studies Financial Forecasting for Business
Chapter 36 Financing the Business
Managing Financial Operations
MULTIPLE-CHOICE 1) Mark sells 2 bags of Haribo at school for £1.50 each. He bough the sweets on special offer from ASDA for £1 each. Has he made a profit.
Chapter 12 Financial Management
Re-cap: Cash Flow Cash in or Cash Out (Interactive Game)
Topics Covered Business Costs Revenue Profit Expenditure
BUDGETING FOR PLANNING & CONTROL
Topics Covered Business Costs Revenue Profit Expenditure
Estimating Revenues, Costs & Profits
Chapter 12 Financial Management
Topics Covered Business Costs Revenue Profit Expenditure
LO1) To describe the purpose of a balance sheet
Investing in the Free-Enterprise System
Topics Covered Business Costs Revenue Profit Expenditure
Topics Covered Business Costs Revenue Profit Expenditure
Budgeting to Achieve Your Financial Goals
Sort it out… Sort the cards out in to two headings: Financial
Re-cap Charlie wants to set up a chocolate factory. Organise the below costs in to start-up and operating (running) costs. Sales brochures Electricity.
Setting Budgets.
To describe LIFO & FIFO stock valuation tools.
Btec Business Studies Unit 2 Assignment 4
Budgeting AS Business Studies.
Learning Objectives TOPIC: Topic 5: Operations Management
Chapter 12-Financial Management
Budgeting AS Business Studies.
Presentation transcript:

Re-cap Charlie wants to set up a chocolate factory. Organise the below costs in to fixed (indirect) and variable (direct) costs. Raw materials Telephone Bill Wages Rent Electricity Bill Council Tax = 5mins

1) To describe what a budget is and why businesses use budgeting. UNIT TITLE: Topic 3: Accounts & Finance LESSON TITLE: Budgets COMPETENCY FOCUS: Key Skills (L5): you will be able to develop your numeracy skills to calculate financial transactions of a business and to interpret financial data. Learning Objectives By the end of the lesson, you should be able to… 1) To describe what a budget is and why businesses use budgeting. 2) To explain the advantages and limitations of using budgets for planning. 3) To calculate variance to determine the accuracy of budgets.

Key Terms Budget Variance Expenditure Income Forecast Favourable Adverse

Using the table below, complete a personal budget for yourself over the next 3 months. (5mins) Sept Oct Nov Income Allowance TOTAL Expenditure Phone bill Going out Christmas Savings

Fantasy Football League You have £40 million pounds to select your football ‘dream team’. You must not go over your budget. Use the website http://fantasy.premierleague.com/player-list/ to get the names of your players, the position they play and their cost. Once you have drawn on the following diagram the names and costs, you must then justify why you made the choices that you did and if you had to sacrifice any of your initial ideas.

Why budget? Planning – anticipate problems and provide solutions early Measure success and that objectives are being met Motivation when come in under budget! Prevents overspending

Problems with setting budgets Time-consuming therefore costly Planned figures therefore often inaccurate Conflict Changes in circumstances therefore unreliable May de-motivate if budget is unrealistic

Budgeting Vs Budgetary Control Budgeting : Helps a business to plan future expenditure and revenue, to make sure that the business makes a profit. Budgetary Control: Process of monitoring and checking if the business is coming in under or over budget and taking correct action if it overspending.

Case Study Task Complete case study task ‘why do businesses budget?’

Variance Analysis Stages in budgetary control Preparation of plans (budgets) Comparison of plans with actual results Analysis of Variances

Variance Analysis Variance = Difference between the predicted and actual figure. Can be ‘favourable’ (F) or ‘adverse’ (A) Example: Forecast Actual Variance Revenue 2,250 2,050 +200 (F) Labour 500 412 +88 (F) Materials 800 900 -100 (A) Transport 100 140 -40 (A) Profit 850 598 -252 (A)

Variance Analysis Forecast Profit= 2,250 – 1,400 = 850 Actual Profit = 2,050 – 1,452 = 598 Profit Variance = -£252 (A)

Task 2 Variance Analysis Task

Task 3 Produce a factsheet/information leaflet for Business Link to hand out to new business owners on the advantages of budgeting. You must include: What is a budget? What is budgetary control? Why is budgeting important? What are the advantages and disadvantages of budgeting? 5 Top Tips for budgeting your money

1) To describe what a budget is and why businesses use budgeting. UNIT TITLE: Topic 3: Accounts & Finance LESSON TITLE: Budgets COMPETENCY FOCUS: Key Skills (L5): you will be able to develop your numeracy skills to calculate financial transactions of a business and to interpret financial data. Learning Objectives By the end of the lesson, you should be able to… 1) To describe what a budget is and why businesses use budgeting. 2) To explain the advantages and limitations of using budgets for planning. 3) To calculate variance to determine the accuracy of budgets.

Key Terms Budget Variance Expenditure Income Forecast Favourable Adverse