8 - Budgets

Question 1

what is a budget

Answer 1

financial plan for the future,should drive business decisions

Question 2

historical budgets

Answer 2

using data available, businesses may adjust histroaical budegts based on future events, limitations and professional judgements

Question 3

zero based budgets

Answer 3

used when there isnt histroical data available
opporutnity cost of spending must be considered
efficeint and minimising unnecesary costs but can also be a brarier to decision making

Question 4

issues with budgets

Answer 4

is only as accurate as the data its based on
past trends may not rleate to the future
doesnt account for unexpected changes
may be unmotivating if its unrealistic

Question 5

variance analysis

Answer 5

comapres the forecast data to the actual figures
used to anaylse the accuracy of the budgeting process

Question 6

examples of expedniture budgets

Answer 6

promotion
material costs
labour costs

Question 7

revenues and earning budgets

Answer 7

product A sales budget
product B sales budgets