Topic B.2a Budgeting Who is this man? What’s in the case? What does this mean?

T OPIC B.2 A B UDGETING By the end of this topic you will: Understand the purpose of budgeting in setting expenditure and revenue budgets Be able to explain the difference between budgeting and budgetary control

2 M INUTE T EST - R ECAP What is meant by the term revenue? What is meant by the term expenditure? End

R EVENUE AND EXPENDITURE BUDGETS Revenue Budgets a target set for the amount of money coming into a business from sales in a set time period Purpose can be split by products, services or departments may be translated into individual sales targets for staff can measure performance against the budget can motivate staff encourages managers to look into the future

R EVENUE AND EXPENDITURE BUDGETS Expenditure budgets a limit placed on the amount to be spent in a given period of time Purpose can be split by department, function or product responsibility can be passed to individual managers a separate expenditure budget may be set for running costs and start up costs allows for monitoring of under spending as well as overspending encourages managers to look into the future Recap: What is meant by running or operating costs? What is meant by start-up costs? Give an example of each for a garage offering tyre and exhaust sales and fittings.

S AMPLE REVENUE AND EXPENDITURE BUDGET Jan £ Feb £ Mar £ Revenue Budget Expenditure Budget Profit Budget What is the profit budget for each month?

B UDGETING Have you ever set yourself a budget? Amount to be spent in a week on lunches Amount to be spent on a present Target for money to be received in a week Have you ever been set a budget? How much to spend on a present Holiday spending money Is giving a child pocket money a form of budgeting? Is budgeting important to: You Younger children University students Adults Parents Pensioners?

B UDGETING AND B UDGETARY CONTROL Budget Budgeting = the process of setting a budget Budgetary control = the process of measuring performance against the pre set budget

2 M INUTE T EST - R ECAP What is meant by the revenue budget? State one purpose of an expenditure budget What term describes measuring performance against the budget plan? End

T OPIC B.2 A B UDGETING You have now completed this topic, are you able to? Understand the purpose of budgeting in setting expenditure and revenue budgets Be able to explain the difference between budgeting and budgetary control This will be tested in the next quiz