It's the 4th week of Steemit Learning Challenge and I am pleased to participate in this week's lesson. I will present my homework using the questions given by the teachers as guideline;

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What is Budgeting and How Does it Relate to Costing

Budgeting is the process whereby financial plan are being set on how to allocate resources in order to know the expected expenses for production. With budget in business, you can set limits by spending money according to the business' priorities, achieve financial goals, get your spending awareness in check and also have this preparedness for unexpected expenses ( emergency fund).

Both budgeting and cost are related because they work together to yield good profit. I would say that; budgeting is the first step to financial planning in terms of the expenses while cost gives a detailed on that particular expenses on the budget list. Budgeting also gives an accurate cost and reveal costing data of raw materials when there is an inflation rate.

These two financial tools in business helps an entrepreneur to maximize profits, manage expenses and also achieve financial goals.

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Importance of Budgeting in Determining Costs

• Budgeting is an important part of business which helps the business owner to estimate and predict accurately during productions.

• Budgeting is very important because it gives appropriate prices for each product after analysing the costs.

• Every entrepreneur understands market strategies which is why it is important to apply costs through setting budgeting in order to achieve profits.

• Costs related risks can easily be avoided when budget is already drafted out.

• Costs can be controlled when there are set up budget for the future expense during productions. This helps an entrepreneur to focus on more important raw materials for that production.

Budget For Cake Preparation

Direct Cost for Cake Preparation

I will start by listing the direct cost required for the preparation of cakes based on estimated quantities and prices.

Cost	Required for 1 Month	Unit Value	Amount
Flour	10kg	600 per kg	6,000
Sugar	5kg	400 per kg	2,000
Eggs	60 units	15 per egg	900
Butter	5kg	800 per kg	4,000
Cake Boxes	50 units	20 per box	1,000
Vanilla flavor	0.5 litres	2,000 per litre	1,000
Labour	5 days	10,000 per day	50,000
Total	-	-	64,900

Indirect Costs of Cake Preparation

Assume the following indirect costs are associated with the preparation of cakes:

Cost	Types of Cost	Amount
Oven and Equipments	Indirect	25,000
Gas	Indirect	10,000
Electricity	Indirect	5,000
Total	-	40,000

Sum of all Costs

Cost	Required for 50 Cakes	Unit Value	Total Amount
Flour	10kg	600 per kg	6,000
Sugar	5kg	400 per kg	2,000
Eggs	60 units	15 per egg	900
Butter	5kg	800 per kg	4,000
Cake Boxes	50 units	20 per box	1,000
Vanilla flavor	0.5 litres	2,000 per litres	1,000
Labour	5days	10,000 per day	50,000
Oven and Equipments	-	-	25,000
Gas	-	-	10,000
Electricity	-	-	5,000
Total	-	-	104,900

Budget for Hairdressing Services

Direct Costs and Hourly Rate

Assuming the monthly salary for the hairdressing service is 400,000. A typical hairdresser works 160 hours per month.

Indirect Cost for Hairdressing service

Cost	Type of Cost	Amount
Rent	Indirect	50,000
Tools and Equipment	Indirect	30,000
Shampoo and Supplies	Indirect	10,000
Advertising	Indirect	10,000
Total	-	100,000

Prorating Indirect Cost

Total Cost Per Hour

I will invite @eliany, @ruthjoe and @suboohi to join the entrepreneurial class.