Budgeting and Cost Control

2 days

Introduction

In making financial business decisions, the decision maker needs to understand the fundamentals of budgeting and costing. This programme has been devised to give business decision makers a good understanding on budgets, cost controls, variances and associated analysis that will lead to better decisions being made. The course will clarify budgeting terms; clearly explain the methodology used and cover traditional budgeting methods through to newer methods and approaches.

Programme Objectives

Having completed the programme the participants should be able to;

• Understand the budgeting process
• Understand budgeting and costing terminology
• Be in a position to devise their own budget and control system
• Be aware of non budget tools such as Balance Scorecards

Method & Approach

This programme will be interactive and practical giving participants a mixture of learning through discussion, group and individual exercises, and case studies. The programme will be supported with a workbook.

Who should attend?

All personnel involved in preparation of budgets or supervising others who provide and enter information. Anyone else who wants to understand budgets and costing within their business.

Day 1

Strategic and Financial Planning

• What comes before the financial numbers
• Differences between Financial and Management accounting
• Changing Competitive Environment
• How strategy links to budgeting and costing
• The need for the strategic plan
• Mission, Vision, Goals
• Using Porter‰Ûªs 5 Forces, SWOT and PESTLE
• Aligning budgeting to the Organization‰Ûªs strategy
• Case studies and exercises

Factors Affecting Budgeting and Cost Control

• The Product Lifecycle
• Focus on customer satisfaction
• The Value Chain
• World Class Manufacturing
• Just In Time (JIT)
• Quality Management Systems
• Theory of Constraints
• Backflush Accounting
• Throughput Accounting
• Target Costing
• Case studies

Day 2

Costing: From traditional to Activity-Based

• Different types of costs
• Cost centres
• Full costing
• Absorption costing
• Marginal costing
• Standard costing
• Break even analysis
• Activity-based approaches
• Variance analysis
• Direct product profitability
• Case studies and exercises

Budgets and Variance Analysis

• What is budgeting?
• Planning, co-ordination and communication
• Types of Budget: Short, long, fixed, rolling, incremental, zero based (ZBB), Kaizen
• The Master Budget
• Operating Budget
• Financial Budget
• Cash Budget
• The Human side of budgeting
• Sensitivity Analysis
• Case studies and exercises

Capital Budgeting and Investment Appraisal

• The time value of money
• Investment Appraisal Techniques:
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Payback Period
• Exercises and case studies

Beyond Pure Financial Budgeting

• Balance Scorecard
• Six Sigma
• Budgets and issues of motivation