1. Basics of financial management Chapter 14

2. Budgeting
Budgeting is the translation of plans into quantitative (financial) statements.
Budgeting is part of short-term planning.

3. Communication and coordination
Budget purposes
Planning
Communication and coordination
Target-setting and authorization
Evaluation

4. Balanced scorecard Vision and strategy Customer perspective
Business processes perspective
Financial perspective
Learning and growth perspective

5. Master budget Sales budget Operational budgets Financial budgets
Production budget
Projected cash flow
Projected profit and loss account,
Balance sheet
Material, staffing budgets
Purchasing budget

6. Cost budgets Variable cost budget Standard cost per activity
Fixed cost per period
Fixed cost budget
Combination of variable cost budget and fixed cost budget
Mixed budget

7. Budget evaluation
Diffe-rence?
Budget
Actual figures
Analysis!

8. Variance analysis
Budget variance = (Qs x Ps) – (QA x PA) Efficiency variance = (Qs – QA) x Ps Price variance = (Ps – PA) x QA possibly also: - volume variance - spoilage variance

9. Budget variance Price PA Price variance Ps Standard costs
Efficiency variance Qs QA
Quantity