Finance Unit - Budgets

Finance Unit - Budgets

1. DEF: A budget is a financial plan that sets targets based on projected costs and revenues

2. Types of Budgets

   • Income budget
   • expenditure budget
   • profit budget

3. BENEFITS of using budgets:

   • - can measure performance
     • - can improve motivation
       • -progress monitoring

4. DRAWBACKS of using budgets:

   • - new business's lack experiance in setting realistic budgets
     • Costs are volatile and can change quickly

5. Variance analysis-

   • Favourable variance
   • Actual costs are lower than budgeted figures
   • Adverse variance
     • costs are more than budgeted