Use of budgets for management and control

Overview

Budgets translate an organization’s strategic plans into goals that can be put into action by those departments. The liquidity budget and operating budgets, in particular, help departments plan the allocation and use of the organization’s financial resources. A budgeted profit and loss account, which is the final operating budget to be prepared, represents the expected profitability of the organization if the activities are carried out as planned in the operational budgets. A liquidity budget is prepared to ensure the availability of adequate liquidity needed to pay expenses during the budget period. This course examines how some of the key operating budgets are prepared. In particular, it shall examine operating budgets which relate to the production and cost of the goods produced; as well as administrative, general and sales expenses. In addition, it explains how different numbers are calculated for an estimated profit and loss account. Finally, it deals with various components of a liquidity budget.

Target Audience

Financial and non-financial specialists, functional managers, directors and all persons directly or indirectly involved in the planning and control of an organization.

Objectives

• Preparation of operating and liquidity budgets
• Recognize the benefits of the ability to prepare operational budgets and liquidity
• prepare a production budget in a specific scenario
• calculate the budgets used to determine the cost of the goods produced
• calculate the budget of sales, administrative and general expenses (SAG) for a certain period
• Identify the steps to prepare a budgeted profit and loss account
• associate the subcategories with the components of the liquidity budget to which they belong