Effective Budgeting and Cost Control 

Learn to align budgets with strategic plans, prepare key financial statements, and apply cost control tools for better decision-making in this comprehensive course.

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Overview

Planning and budgeting are essential skills for all professionals, regardless of their role or managerial level. This course comprehensively covers budgeting as a planning tool, financial device, and control mechanism. Additionally, it equips participants with the application tools needed to make informed long-term and short-term planning decisions.

Course Objectives

By the end of the course, participants will be able to: 

  • Defend the importance of linking an organization's budget with its strategic plan
  • Demonstrate how the budget relates to the balance sheet, income statement, and cash flow statement
  • Prepare the key elements of an operating and capital budget and evaluate the different budgeting approaches used
  • Apply cost control tools, analyze management variance reports, and take proper corrective action
  • Calculate different capital budgeting evaluation techniques as included in a capital expenditure proposal

Course Outline

Duration: 5 days
Planning and the Functions of Management
  • The critical functions of management
  • Budget as a planning tool
  • Control: The missing link
  • Roadmap to strategy
  • Aligning the budget with the organization’s strategy
  • Planning pitfalls
  • The accounting system
  • The income statement
  • The balance sheet
  • Retained earnings
  • The cash flow statement
  • The advantages of budgeting
  • The budget process
  • Rolling budgets
  • Direct and indirect costs
  • The master budget
  • Operating and capital budgets
  • Approaches to budgeting:
  • Incremental budgeting
  • Zero-based budgeting
  • Flexible budgeting
  • Kaizen budgeting and continuous improvement
  • Activity-based budgeting
  • Tools of forecasting
  • Characteristics of an adequate budget
  • Problems in budgeting
  • Budget as a control tool
  • The control process
  • Characteristics of an effective control system
  • Responsibility reporting
  • Variance analysis:
  • Identifying the components of variance
  • Taking the corrective action
  • Time value of money
  • The discount rate: Using cost of capital
  • Simple versus compound interest
  • Identifying and analyzing cash flows
  • Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Profitability Index (PI)
  • Pay-Back Period (PBP)
  • Accounting Rate of Return (ARR)
  • Approval for Expenditure (AFE)
  • Sensitivity and risk analysis
  • Defining fixed costs
  • Defining variable costs
  • Breakeven point in units
  • Breakeven point in dollars
  • Computing breakeven point in sales
  • Sensitivity analysis: Changing assumptions

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