Effective Budgeting & Cost Control Workshop

Course Overview

Planning and budgeting are must-have skills for all professionals regardless of their function or managerial level. This course covers the concept of budgeting as a planning tool, a financial device and a control mechanism. In addition, it provides the necessary application of a long and short-term planning decisions.

Course Methodology

This course focuses on exercises, case studies, and individual and group presentations.

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 key financial statements: balance sheet, income statement, and cash flow
• 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
• Utilize cost-volume-profit analysis in making budgeting decisions

Target Audience

All managers, supervisors and analysts who prepare or use management budgets.

Target Competencies

• Interpreting Financial statements
• Planning and budgeting
• Cost control
• Capital budgeting
• Applying cost-volume-profit analysis
• Utilize breakeven analysis

Key Course Outline

DAY 1

• Planning and the functions of management
•          The critical functions of management
•          Aligning the budget with the organization’s strategy
•          Road map to strategy
•          Budget as a planning tool
•          Control: the missing link
•          Planning pitfalls
• The key financial statements
•          The accounting system
•          The income statement
•          The balance sheet
•          The cash flow statement
• Budgeting: process and approaches
•          The advantages of budgeting
•          The budget process
•          Rolling budgets
•          The master budget
•          Operating and capital budgets
•          The budgeted financial statements
•          Approaches to budgeting:
•          Incremental budgeting
•          Zero based budgeting
•          Flexible budgeting
•          Kaizen budgeting and continuous improvement
•          Activity based budgeting
•          Tools of forecasting
•          Direct and indirect costs
•          Characteristics of an effective budget
•          Problems in budgeting

DAY 2

• Cost control
•          Budget as a control tool
•          The control process
•          Characteristics of an effective control system
•          Responsibility reporting
•          Variance analysis: identifying the components of variance
•          Variance analysis: taking the corrective action
• Capital expenditure budgeting and analysis
•          Time value of money
•          Simple versus compound interest
•          Identifying and analyzing cash flows
•          The discount rate: using cost of capital
•          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
• Cost-Volume-Profit analysis (CVP)
•          Identifying the fixed costs and variable costs
•          Computing breakeven point in units
•          Computing breakeven point in sales
•          Assumptions of CVP analysis
•          Using CVP in budgeting decisions