Summary

Budgets are financial plans showing expected costs and revenues over a period of time

Purposes of budgets – they help the business plan and control finances

Problems with budgets – external factors, poor communication, incorrect allocations

Advantages – allows to prioritise, provides direction, can motivate

Disadvantages – need to train staff, can be short term not long term

Calculating variances – look at costs and revenues if they are adverse (negative) or favourable (positive)

Zero budgeting – all areas start off with nothing and have to bid for money