Effective Budgeting and Cost Control

Course overview

Course outline

1. 1Day 1: 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
2. 2Day 2: The Key Financial Statements & Budgeting: Process and Approaches

   • The Key Financial Statements
   • The accounting system
   • The income statement
   • The balance sheet
   • Retained earnings
   • The cash flow statement
   • Budgeting: Process and Approaches
   • The advantages of budgeting
   • The budget process
   • Rolling budgets
   • Direct and indirect costs
   • The master budget
   • Operating and capital budgets
3. 3Day 3: Approaches to budgeting & Cost Control

   • 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
   • Cost Control
   • Budget as a control tool
   • The control process
   • Characteristics of an effective control system
   • Responsibility reporting
4. 4Day 4: Variance analysis & Capital Expenditure Budgeting and Analysis

   • Variance analysis
   • Identifying the components of variance
   • Taking the corrective action
   • Capital Expenditure Budgeting and Analysis
   • 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
5. 5Day 5: Cost Volume Profit Analysis (CVP)

   • Defining fixed costs
   • Defining variable costs
   • Breakeven point in units
   • Breakeven point in dollars
   • Computing breakeven point in sales
   • Sensitivity analysis: Changing assumptions