This chapter looks at budgeting used as a method of control within an organisation.You will already have been examined on budgeting in previous examinations, and much of this chapter is therefore revision.
In this examination, questions are more likely to focus on written aspects, and the syllabus includes budgeting in not-for-profit organisations; modern developments; and behavioural aspects.
Functions of budgeting
- Forecasting
- Planning
- Communication
- Co-ordination
- Control
- Authorising and delegating
- Motivation
- Evaluation of performance
please I don’t understand why in the answer, sales volume variance is 2500. please can you throw light on that for me??
What question or example are you talking about? There is nothing in this lecture about sales volume variances.
Please i meant chapter 3 example 1. part b. the bit about “summarise in a form suitable for management”
In units the sales volume variance is 2000 units (12,000 – 10,000) the budgeted profit per unit is $10 – 97,500/10,000 = $1.25. Therefore, 1.25 x 2000 = 2,500.
Thank you so much, Mr. Ken Garrett
how 97500/10000? didn’t get that calc
got it, nevermind. thanks anyway
So, instead of budgeted profit per unit it should be budgeted contribution per unit, which is $10 – 87,500/10,000 = 1.25
which study text is recommended to supplement the APM Study?
Both BPP AND Kaplan are fine, but you get a 20% discount on BPP books if ordered through this site.
Thanks for the explanation Ken. It was well explained.In your explaining motivation as a function or purpose of budgeting you stated that budgets should be set at a level that will motivate managers (budget holders). Is there an acceptable level for budget motivation and if so then how it is set.
*In explaining instead of in your explaining.
I equally need explanation on how flexi budget figures were derived at (question) in chapter 3.
The budget was set up for production of 10,000. However, 12,000 were made so the flexed budget for variable costs is 12/10 of the original bufget.. Fixed costs are fixed so are not proportional to production volume.
the open tuition notes are good but then for APM there is a budgeting question in the notes chapter 3 which is not explained in the lecture how do i understand it from the answer.
At the end of this lecture, no pass exams question were recommended. Why there is no pass exams question related to this topic?
Perhaps there wasn’t a suitable one.
Thank you soo much open tuition. Very good lecture, well explained and straight to the point
Am enjoying this!
Any suggested tips yet for the March sitting?
thanks a lot open tuition keep it up!
very informative….