Report on Understanding Costs and Budgets in an OrganizationReport on Understanding Costs and Budgets in an Organization

        There is the importance of agreeing to a budget as well as there could be benefits relating to operating it. However, it is analyzed that budgeting is a process of creating a plan in which there are decisions related to the spending plan. Moreover, enough money can be decided and there could be effective budget planning and forecasting. By agreeing to a budget the company or project can manage money and there could be a balancing of the expenses as well as the income.

         There could be better decisions related to the prioritization of the spending or spending plan. Financial plan the organization or venture can oversee cash and there could be an adjusting of the costs and also the wage. The Enough cash can be chosen and there could be viable spending arranging and determining. By consenting to prioritization of the spending or spending plan the organization could take into account the vital long haul arranging. Better decisions can be taken and the company could allow for the strategic long-term planning (Lalli, 2011).

AC 1.2

Describe the process by which a budget is agreed in an organization

            The good budgeting process or the budget that is agreed in an organization is based on the process. However, first, there is the need to write it down with the effective measurement tool then there is the need to decide who should be involved while making the decision and when people involved should be there and it involves the responsibility related to the adhering to budgets. Thus, the third step is the establishment of an annualized timeline that what are some expenses in that are considered yearly. The update of spending plans; as a result of the business spending plan identified with the business achievement. There are additionally the particular obligation assignments that are made with a specific end goal to see the financial plan.

              Moreover, there are also the specific responsibility assignments that are made in order to notice the budget. There other than that or in the last steps, there are budget line items as well as the accounting line items that need to be sync in. the steps of budgeting process involve the gathering of information and planning, then there is the need to focus on the development of the department budgets, then developing cash, negotiation, and evaluation (Institute of Leadership & Management, 2013).

AC 1.3

Explain the process of gathering information to be used for the determination and/or revision of budgets

            While focused on the process of gathering information, there is the need to focus on the revision of budgets; because of the business budget related to the business success. Through gathering the information there can also be the anticipation of the revenue. For the revision of budgets estimating expenses with the use of the business, software can be helpful. Moreover, there is the need to constantly monitor the effectual sales plans as well as the changes in the economy so that there could be the focus on the changes in the competition and results can be forecasted accurately or anticipate revenue. Also, there is the need to continually screen the efficacious deals designs and the adjustments in the economy so that there could be the emphasis on the adjustments.

AC 1.4

Describe a method to monitor variance between actual and budgeted performance

                In order to focus on the method to monitor variance, as well as the actual and budgeted performance, there is the need to concern about the business operating statistics because the variance analysis can help to narrow the areas of operations, as there can be expenses. Moreover, comparing the expected costs as well as the actual costs can help to analyze the differences. Actual and budgeted performance can be record it with the compelling estimation instrument at that point there is the need to choose who ought to be included while settling on the choice.

                  The actual performance of budget is an excellent and budgeted performance can figure out through the comparing actual results or the budgeted numbers. Thus, there is the need to worry about the business working measurements in light of the fact that the fluctuation investigation can limit the zones of tasks, as there can be costs. In addition, looking at the normal expenses and in addition the real expenses can break down the distinctions (Institute of Leadership & Management, 2013).

Section 2:

AC 2.1

Explain fixed and variable costs in relation to the organization

            In relation to the company, the variable cost could be explained as the cost that is associated with an amount of the goods or services that are produced by the company. However, the variable cost increases or decreases when there is the change in the production volume. The variable cost increments or declines when there is the adjustment in the generation volume. Consequently, the fixed cost can be explained as the volume of production which does not change when there is the change in the goods or services amount that a company produces or if no goods are produced. Thus, the settled cost can be clarified as the volume of creation which does not change when there is the adjustment in the merchandise (Hankins & Baker, 2004).

AC 2.2

Explain the concept of break even in relation to the organization

            The concept of breakeven could be explained in the organization through the analysis of the total sales that can be equal to the total costs. However, it is explained as the critical tool in which the managers understand the relationship that is there between volume, costs, and prices. Be that as it may, it is clarified as the basic device in which the supervisors comprehend the relationship idea of breakeven could be clarified in the association through the investigation of the aggregate deals that can be equivalent to the aggregate expenses.

AC 2.3

Explain the purpose and nature of basic cost statements

            The purpose of basic cost statements could be explained as the company achievement when it takes the new projects with the focus on the day-to-day operations the company needs to track the cost statement. Fundamental cost articulations could be clarified as the organization accomplishment when it takes the new ventures with the emphasis on the everyday tasks the organization needs to track the cost explanation. Moreover, the management provides and get the document details information of conducting a project or how to run the department and there is also focus on the manufacturing a product.

AC 2.4

Explain the value of standard costing and its role as a control mechanism

            The standard costing could be explained as the practice of substituting as well as the expected cost for the actual cost. There is the routine with regards to substituting and also the normal cost for the genuine cost. There is likewise an attention on the cost of the layering frameworks, the leading of the task or how to run the division and there is likewise center around the assembling an item. There is also a focus on the cost of the layering systems, however, it also involves the FIFO, LIFO methods. Thus, role as a control mechanism in it is based on some or all activities and there is a number of applications that are reviewed with the time-consuming budget. Thus, there is also the analysis of the inventory costing or overhead application.

AC 2.5

Describe mechanisms in the organization to maintain control of costs

                In order to maintain control of costs, it is analyzed that there is a need to reduce cost in the operations so that there could be effectivity in the business processes. Control instrument in it depends on a few or all exercises and there is various applications that are looked into with the tedious spending plan. In this way, there is likewise the examination of the stock costing or overhead application

                However, reduction refers to the need to be analyzed by the business managers so that they could properly monitor, evaluate and trim the expenditures. Company-wide program in this way need the planning process, control reports etc. Thus, in order to lower down the cost in the activities so that there could be effectivity in the business forms. The decrease alludes so should be investigated by the business chiefs with the goal that they could appropriately screen (Hankins & Baker, 2004).

References of Understanding Costs and Budgets in an Organization

Hankins, R. W., & Baker, J. J. (2004). Management Accounting for Health Care Organizations: Tools and Techniques for Decision Support. Jones

& Bartlett Learning.

Institute of Leadership & Management. (2013). Working with Costs and Budgets. Routledge.

Lalli, W. R. (2011). Handbook of Budgeting. John Wiley & Sons.