- What is advantage of Budgeting?
- How does traditional Budgeting
differ from Activity Based Budgeting?
- How does Budgeting differ from
Planning?
- How does Budgeting differ from
Forecasting?
- Does traditional Budgeting support
Improvement?
1. What is advantage of managing by
Budgeting
Creating a Budget:
- translates a plan into financial terms.
- helps determine cash flow requirements for business
- can indicate priorities by funding high priority items
- helps understand timing and cash flow needs for large capital projects
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2. How does traditional budgeting
differ from Activity Based Budgeting?
Traditional budgeting focuses on:
- expenses
- departments, cost centers, divisions
- variance analysis of actual versus budget
Activity Based Budgeting focuses on:
- cost objects (e.g. customers, products, services, suppliers)
- volume for each activity
- cost drivers and how costs vary with volume )e.g. flexible budgeting)
- performance improvement
- performance measures of activities and processes
- activities and processes that employees can understand rather than
abstract concepts like depreciation and amortization
- how cross functional processes affect cost
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3. How does Budgeting differ from
Planning?
Planning describes in words what an organization intends to accomplish in
some time frame..
Budgeting translates a plan into financial terms.
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4. How does Budgeting differ from
Forecasting?
Budgeting is usually a once per year endeavor.
Forecasting updates on some regular basis what the organization thinks
the results will be based on the latest information.
- Quarterly forecasts until year end or for next 4 quarters
- Semi-annual forecasts
- rolling 12 month forecasts
- monthly forecasts for next quarter and quarterly forecasts till end
of year
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5. Does Budgeting support Improvement?
- Jack Welch said that "Budgeting is Bane of Business.
- .Budgeting is a minimization exercise because employees often sand
bag the budget to increase their bonus.
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Call John Antos at 972-980-7407 to find out how to Improve your
Budgeting to help you reach your goals and give your peace of mind
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