Hello everyone, good morning to you all and welcome back to my blog. Costing and Budgeting is an important thing in our daily business. I'm so glad to have participated in this Class because I really learnt a lot.

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What is budgeting and how does it relate to costing?

Budgeting is the method of planning for future financial performance. It also entails creating a detailed financial plan that shows income and expenses at a particular period in time. It helps business owners to allocate money, manage resources and achieve financially goals effectively. Businesses can't do without budgeting because it's helps them to monitor income, expenditure. Ensuring financial Stability and profit.

Costing on the other hand can be referred to as as the process of determining the monetary worth of making goods and services.
It also have to do with calculating and knowing the amount of money spent on production, Operations and acquisition

These are the ways Budgeting relates to costing

• Costing provides the Foundation for budgeting

Accurate costing helps in creating realistic and achievable budgets. By understanding the true cost, Business owners can allocate proper amount of revenue to business.

• Budgeting helps to reduce inappropriate costing

Budget helps businesses to create spending limit for various expenditure. By comparing actual costs to budget, business owners can notice when Cost is exceeding expectations and take action.

• They both support decisions making

Budgeting and costing are very vital in every Business, they both work hand in hand to ensure that businesses makes the right choice which will be profitable for the business.

• Pricing and Profitability

Effective costing help us to determine a price range suitable for a particular product according to the Budget and which in turns helps in making profit.

Finally, budgeting and Costing walks together, to ensure appropriate decision making, control costs and achieve financially goal.

Explain the importance of budgeting in determining costs.

• Setting financial limits

Budgeting helps business owners to set financial limits for expenditure by ensuring that they make do with the fund at hand thereby preventing unnecessary spending.

• Increasing Efficiency and accuracy

Budgeting helps to ensure appropriate costing in business operations, thereby promoting efficiency and accuracy.

• Appropriate Financial decisions

Finally Budgeting aids to provide a clear financial plan, helping businesses to make and implement good financial decisions.

• Cost Estimation and Allocation

It helps to determine how funds are spent inorder to ensure that finances are used well.

• Reducing financial risks

Proper budgeting helps businesses to notice financial risks on time and this enables them to take adequate actions to tackle it.

Prepare the budget as explained, for the preparation of cakes. Consider a 4% adjustment.

Cake Preparation budget

Ingredients Cost

Ingredients	Amount
Flour	#1000
Margarine	#500
Sugar	#500
Eggs	#600
Baking powder	#100
Dry fruits	#300
Milk Flavor	#200
Vanilla Flavor	#300
Total Ingredients	#3500

Time for Labor:( 8 hours) 1 hour cost= #600
Total hours= 6 x #600= #4800

• Overhead Cost:

Items	Cost
Maintenance	#5000
Packaging	#2000
Transportation	#500
Delivery	#1000
Utility bills	#1000
Gas	#2000
Total Overhead	#11500

• Total Cost
  Ingredients+ Overhead+ Labour =#3500+ #4800+ #11500=#19800

• 4% adjustment:
  #19800 x 4%= #19800 x 0.04=#792
  Total cost of adjustment:
  #19800 +#792= 20592

Summary of Final Budget

Ingredients	#3500
Labour	#4800
Overhead	#11500
Adjustment	#792
Total Budget	#20592

Prepare the budget as explained, for the hairdressing service. Consider a 3% adjustment.

Materials	Cost
Shampoo	#2000
Styling Gel	#1000
Conditioner	#2000
Disposable towels	#6000
Disposable Gloves	#1000
Total Materials	#12000

Labour Cost:
Time for Labour: (8 hours) 1 hour= #500
Total hours= 8 x #500= #4000

Overhead Cost:

Items	Cost
Utility bill	#1500
Booking	#500
Total Sundry	#2000

Total Cost
Ingredients+ Overhead+ Labour=#12000+ #4000+ #2000= #18000

• 3% adjustment:
  #18000 x 0.03= #540
  Total Cost of adjustment:
  #18000+#540= 18540

Summary of Final Budget

Materials	#12000
Labour	#4000
Overhead	#2000
Adjustment	#540
Total Budget	#18540

Thanks to the teacher for organizing such as an educating Lecture. Thanks for reading through my post, I invite @newekemi, @chiagoziee and @basil20 to participate in this contest.