Budgeting & Cost Control

Introduction:

All business decision-making involves analyzing situations containing varying degrees of risk. This program uncovers the essential skills required to understand the processes of budgeting and cost control for better decision-making. From understanding the importance of a well-defined budget process through to the importance of how costs behave so that realistic cost-cutting and budgeting plans can be produced.

Targeted Groups:

• Financial Professional
• R&D Professional
• General Accounting Professional
• Business Unit Professional
• Anyone who wants to refine and advance their budgeting and costing knowledge
• The staff person who will be responsible for entering data into the budget system or training others how to enter information
• Those who want to gain control of the firm's financial standing and obtain a firm grasp on the numbers side of their job

Course Objectives:

At the end of this course the participants will be able to:

• Identify the principal factors required to produce a successful business case
• Develop budgeting and financial skills required for better decision-making
• Identify sources of financial and business data to support the budgeting process
• Learn new techniques and methodologies to simulate typical business scenarios
• Understand the importance of a well-defined budget process
• Learn costing and budgeting terminology used in business
• Master techniques for cost-benefit analysis
• Learn how to construct profit, cash and balance sheet plans and budgets
• Learn how to evaluate variances from plan and identify corrective actions
• Understand discounted cash flow (DCF) techniques and their application to financial decision making
• Build and use budgets relevant to your organization

Targeted Competencies:

• Interpreting financial statements
• Planning and budgeting
• Cost control
• Capital budgeting
• Applying cost-volume-profit analysis
• Utilizing breakeven analysis

Course Content:

Unit 1: The Need for Financial Control in Business: 

• Understanding accounting
• Management accounting versus financial accounting
• The relationship between business management and financial management
• How budgeting fits into the bigger picture
• How cost management improves an organization’s financial position
• Key aspects of managing working capital

Unit 2: Capital Budgeting and Investment Appraisal: 

• The time value of money
• Understanding Appraisal Techniques - Net Present Value (NPV), Internal Rate of Return (IRR) and Payback period
• Selecting an appraisal technique
• The use of Sensitivity analysis in evaluating projects
• Strategic considerations in assessing capital projects
• Creating an effective Capital Budgeting framework

Unit 3: Cost Analysis and Management: 

• Understanding cost structure and behavior
• Costs as a relationship to outputs – cost/volume/price relationship
• The concept of contribution margin
• Break-even analysis for planning and control
• Cost allocation and apportionment
• Benefit-cost analysis

Unit 4: Full Costing, Marginal Costing, and Activity-Based Costing: 

• Comparing full and marginal costing
• Direct and indirect costs in budgeting for decision making
• Role of costs in pricing strategies
• Activity-Based Costing (ABC)
• Managing cost control

Unit 5: Budget Construction and Control: 

• Nature and purpose of budgets for planning and control
• Types of budgets and budgeting
• Creating Key Performance Indicators for financial and non-financial performance
• Building a budget
• Budgetary control and variance analysis
• Budgeting for non-financial measures -introducing the Balanced Scorecard