College budget discussion forum

Budgeting is important not only for businesses. Also in our personal lives we have scarce resources, especially money and time, but also other resources like for example cell phone data, use of the family computer or family TV set, access to childcare etc.

Our college prepares annual budgets as well. You find the college's budgethere:

http://www.sbcc.edu/fiscalservices/files/budget/Adopted%20Budget%20Master%20Budget%20Workbook%20090619.pdf

Please look at page 5, the Unrestricted General Fund and share your observations about at least 2 line items of your choice. Compare the 2019/20 budgeted amounts with the 2018/19 actual amounts.

Share your observations with the class and discuss possible reasons for the differences (or similarities) you observed.

Variances discussion forum

One of management's functions is to control company operations. Control consists of the steps taken by management to see that planned objectives are met. We now ask: How do budgets contribute to control of operations? The use of budgets in controlling operations is known as budgetary control. Such control takes place by means of budget reports that compare actual results with planned objectives. The use of budget reports is based on the belief that planned objectives lose much of their potential value without some monitoring of progress along the way. Top management requires periodic reports on the progress of department managers toward their planned objectives.

These budget reports provide management with feedback on operations. Budget reports are prepared as frequently as needed. From these reports, management analyzes any differences between actual and planned results and determines their causes. Management then takes corrective action, or it decides to modify future plans. Budgetary control involves the activities shown in the picture:

Pick any company of your choice and discuss, which variance(s) you believe (is) are the most important one(s). You may focus on the cost variances, e.g. variances between budgeted and actual sales revenue or budgeted and actual cash in/outflows. Please share why you feel this variances is of crucial importance and how often you believe a manager should look at the reports (e.g. daily, weekly, monthly, quarterly).