42. Budgeting (AAT)

The content of this particular qualification includes the following: 

01. The budgeting environment: INTRODUCTION TO BUDGETING, SOURCES OF INFORMATION FOR BUDGETING, FINANCIAL ACCOUNTING & MANAGEMENT ACCOUNTING, Financial accounting, Management accounting, Financial & management accounting compared, MANAGEMENT ACCOUNTING SYSTEMS, Methods of costing, ABSORPTION COSTING, Terminology:, Steps in absorption costing, MARGINAL COSTING, ACTIVITY BASED COSTING (ABC), Background to ABC, Cost pools & cost drivers, COSTING SYSTEMS & RECORDED PROFIT, Variations in inventory (stock) valuation, The effect of inventory valuation on profit, AUTHORITY & RESPONSIBILITY, Budget centres as areas of responsibility, CONTROLLABLE COSTS & INCOMES, STANDARD COSTING, Advantages of standard costing, COST BEHAVIOUR, Variable costs, Fixed costs, Step costs (or stepped-fixed costs), Semi-variable costs, Limitations of cost behaviour analysis, The high-low method. 

02. Forecasting techniques: FORECASTING TECHNIQUES, Primary & secondary data, Census or sample?, SAMPLING, Random sampling, Quasi-random sampling, Non-random sampling, TIME SERIES ANALYSIS, An identical annual change, Average annual change, Constructing a graph, Using a formula, Linear regression, TIME SERIES ANALYSIS & SEASONAL VARIATIONS, Analysing historical actual data, How do moving averages work?, Dealing with an even number of 'seasons, Absolute or percentage seasonal variations?, PERCENTAGE CALCULATIONS, INDEX NUMBERS, Leading & lagging indicators, Weightings of indices, Calculations using index numbers.

03. Preparing budgets – the main principles: THE PURPOSE OF BUDGETS, 1. The budget compels planning, 2. The budget communicates & co-ordinates, 3. The budget can be used to authorise, 4. The budget can be used to monitor & control, 5. The budget can be used to motivate, THE INITIAL STEPS IN BUDGET PREPARATION, The aims of an organisation, Objectives & strategy, Relevant data, Data from internal sources, Data from external sources, Limiting factors - the 'key' budget factor, The initial budgeting process, CO-ORDINATING THE MAIN TYPES OF BUDGET, The effect of changing inventory levels, RESPONSIBILITIES & TIMESCALES FOR BUDGET SETTING, The budget manual, The budget committee, Budget timetables, Capital expenditure budgets, MOTIVATIONAL ASPECTS OF BUDGET PREPARATION, Participation in budget preparation, USE OF FORECASTING TECHNIQUES, Trend analysis, Market research, Consulting experts, FACTORS INFLUENCING FORECASTS, The product life cycle, PEST analysis, DEALING WITH UNCERTAINTY, CREATING BUDGETS, Sales budget, Production budget, Materials usage & labour utilisation budgets, Materials purchases budget, Cash budget, CALCULATING COST OF PRODUCTION, COMMUNICATING BUDGET ASSUMPTIONS, REVISING A BUDGET, DIVIDING BUDGETS INTO SHORTER PERIODS. 

04. Preparing budgets – dealing with resources: BUDGETS - ACCOUNTING FOR RESOURCES, The problems, How to deal with the problems, REJECTION OF FINISHED GOODS, NON-PRODUCTIVE TIME, MATERIAL WASTAGE DURING PRODUCTION, MATERIAL WASTAGE BEFORE PRODUCTION, DEALING WITH LIMITED MATERIALS, DEALING WITH LIMITED LABOUR, DEALING WITH LIMITED PRODUCTION CAPACITY, Permanent inability to supply, Temporary inability to supply, DEALING WITH A COMBINATION OF LIMITATIONS, PRODUCT CHOICE WHEN THERE ARE LIMITED RESOURCES.

05. Monitoring performance with budgets: COMPARING RESULTS WITH BUDGET, Calculating variations, COST BEHAVIOUR & BUDGETS, Fixed & flexed budgets, PREPARATION OF FLEXED OR FLEXIBLE BUDGETS, Preparing a flexible budget, Flexible budgets in marginal costing, Comparison of marginal & absorption costing, REASONS FOR VARIANCES, Analysing cost variances, DIRECT MATERIAL VARIANCES, Direct material price variance, Direct material usage variance, Remembering how to calculate direct variances, DIRECT LABOUR VARIANCES, Direct labour rate variance, Direct labour efficiency variance, OTHER PERFORMANCE INDICATORS, MOTIVATION BY REWARDING PERFORMANCE, Performance related pay, Goal congruence, MANAGEMENT ACTION, Feedback, Favourable variances, Control action, Feedforward. 

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