Hello friends, welcome to my blog.
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The term budget is a word commonly used right from our households. In those good old times, we listen when our parents mention family budget for the month or year as the case maybe. This in simple terms means an estimation (in cost) considered to take care of a period under review. This translates into what compaines and nations also put in place to help appropriation and spending done legitimately.
It is an intentional plan that is put in place to help manage the resources and inflows with consideration made to report expanses relative to overall incomes. Setting up of financial guide is always the best for resource control and expenditures. This is why budgeting is directly related to costing.
If we must want to see the relationship between both factors, we have to see them through their complementary roles between each other. In resource allocation cost data analysis is a vital determinant in ensuring effective budgeting. Resources are evenly dostributed to activities according to their cost efficiencies.
Financial comtrols are efficient through actual cost required for services and budgeted amount. We have to know this to help ensure effective performance for service delivery.
We can not exempt concerns bothering on effective and efficient decision making in our budgeting process. And an integral part to this, is the cost data information available.for use.
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1.Resource Allocation:
Through effective budgeting, cost could be identified relative to how we prioritise them for efficiency execution of activities. We can now allocate resources to areas that meet and need our goals.
2.Cost Control:
This serves as a guide to spending money. With budgeting, cost limits are outlined which makes it difficult to spend outside budgeted amounts. With this, monitoring of expenditure is optimized which brings consciousness to regulated guidelines.
3.Performance Review:
Through budgeting, we can now review performance of a given budgetary organization. Performance of budgeted financial plan against expenditures made thereafter. We can easily identify gray areas underpferforming due to financial constraints where costs outweighs nudgeted amount.
4.Help in Decision-Making:
And effective budget help give a comprehensive overview of the entire performance of a financial period. This is where data collated relative to resources allocation, pricing, and investment (cost) are reviewed for a decision making.
5.Fosters Accountability:
Budgeting help to streamline the performances of every department and agency of government for an efficient finicial accountability. Funds are allocated based in budgetary provisions, and this is spent according to requires objectives and goals.
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In preparing a budget, we would outline all components in the budgetary process while considering all ingredients needed to make best of the cake. We will consider a 4% adjustment to estimated cost for each of our ingredients.
Budgetary Plan for Cake:
| Item | Estimated Cost ($) | 4% Adjustment($) | Adjusted Budgetary Cost ($) |
|---|---|---|---|
| Ingredients | |||
| Flour | 150 | 6 | 156 |
| Sugar | 100 | 4 | 104 |
| Butter | 80 | 3.2 | 3.2 |
| Eggs | 60 | 2.4 | 62.4 |
| Baking Powder | 20 | 0.8 | 20.8 |
| Vanilla Suppliment | 30 | 1.2 | 31.2 |
| Total for Ingredients | 440 | 17.6 | 457.6 |
| LABOUR COST | |||
| Bakers Wages | 400 | 16 | 416 |
| Total for Labour | 400 | 16 | 416 |
| OVERHEAD COST | |||
| Rents | 200 | 8 | 208 |
| Machinery Maintenance | 60 | 2.4 | 62.4 |
| Utilities/Electricity | 100 | 4 | 104 |
| Total for Overhead cost | 360 | 14.4 | 374.4 |
| Total Budgeted | 1200 | 48 | 1248 |
Therefore to give a summary of this budgetary plan:
Total Estimated Cost - 1200
Total 4% Adjustment - 48
Adjusted Budgetary Cost - 1248
Total budgetary cost required for a cake preparation is 1248 after a 4% adjustment. The essence of adjustment is to give room for inflationary and price differentials.
This will be skewed to the same components as seen for cake budgeting.
Budgetary Plan for Hairdressing Services:
| Item | Estimated Cost ($) | 3% Adjustment($) | Adjusted Budgetary Cost ($) |
|---|---|---|---|
| Supplies | |||
| Conditioner | 60 | 1.8 | 61.8 |
| Shampoo | 100 | 3 | 103 |
| Hair colour products | 200 | 6 | 206 |
| Styling Products | 80 | 2.4 | 82.4 |
| Total for Supplies | 440 | 13.2 | 453.2 |
| LABOUR COST | |||
| Wages | 600 | 18 | 618 |
| Total Labour Cost | 600 | 18 | 618 |
| OVERHEAD COST | |||
| Rent | 400 | 12 | 412 |
| Machinery Maintenance | 100 | 3 | 103 |
| Utilities/Electricity | 200 | 6 | 206 |
| Total Overhead Cost | 700 | 21 | 721 |
| Total Budgeted Cost | 1740 | 52.2 | 1792.2 |
Therefore to give a summary of this budgetary plan:
Total Estimated Cost - 1740
Total 4% Adjustment - 52.2
Adjusted Budgetary Cost - 1792.2
Total budgetary cost required for a hairdressing service is 1792.2 after a 3% adjustment. The essence of adjustment is to give room for inflationary and price differentials.
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