02. Budgeting:- Calculating and Interpreting Variances

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What is a budget?
- A budget is a means of planning and control used by the management of a business or organisation to achieve stated objectives.
- A budget is commonly set in financial terms e.g. sales revenue budget but can also be expressed in terms of units, e.g. items produced, items sold,number of employees.
- Budgets can be income budgets for money received, e.g. a sales budget, or budgets for money spent (e.g.administration budget).
- Most budgets are prepared for the next financial year and are usually broken down into shorter time periods, commonly four-weekly or monthly. This enables control to be exercised over the budget.