Planning, Costing and Budgeting For Executive Decision-Making

INTRODUCTION
Like it or not, the budget is the yardstick that top management uses to measure your actual performance. And in today’s tight economy, the manager who knows how to plan and use the budget effectively wins hands down over the one who doesn’t.
This skill is especially important as all business decision-making in these competitive markets involves analyzing situations containing varying degrees of uncertainties and risk, and the available data may be erroneous containing ambiguities and errors.
Therefore, it is important to understand how costs behave so that realistic plans can be produced and appropriate financial resources made available. This knowledge will also equip managers to implement a functional control and feedback mechanism and to evaluate the performance of different departments
In this programme you will learn how to:
 Identify the principal factors required to produce a successful business case
 Develop budgeting & financial skills required for better decision-making
 Identify sources of financial and business data to support the budgeting process
 Learn new techniques and methodologies to simulate typical business scenarios

PROGRAMME OBJECTIVES:
Participants attending the programme will:
 Understand stages in the planning process
 The multiple functions of budgets
 Understand the importance of a well-defined budget process
 Learn planning, costing and budgeting terminology used in business
 Master techniques for cost-benefit analysis
 Learn how to construct profit, cash and balance sheet plans and budgets
 Learn how to analyzed performance and evaluate variances from plan and identify corrective actions
 Understand the time value of money; understand discounted cash flow (DCF) techniques and their application to financial decision making
 Use and build EXCEL spreadsheets for financial analysis, from basic models through to Monte Carlo simulation

TRAINING METHODOLOGY
Participants will learn by active participation during the programme through the use of exercises, case studies, practical workshops, and syndicate and group discussions.
PROGRAMME SUMMARY
The programme covers the essential skills required to understand the processes of planning, budgeting and costing for decision-making. These techniques are presented in a manner that will make them more easily understood by managers (and non managers) from every discipline across the organisation. Real case studies and practical exercises are used to emphasize key issues and underpin learning by relating them to typical business scenarios.
PROGRAMME OUTLINE
DAY 1 – The need for Financial Control in Business
 Understanding accounting and accounting process
 Management account versus financial accounting and financial management
 Cost behaviors in Cost-Volume-Profit scenarios
 Breakeven technique and targeted net income scenarios
 Business cases with master budgets
 Benefit-cost analysis
DAY 2 - Capital Costs and Investment Appraisal
 Understanding the concept of time value of money
 Estimating cash flows within the business system
 Understanding Pay Back period, Accounting Return of Return, Net Present Value (NPV) and Internal Rate of Return (IRR)
 Defining the approval criteria and review process
 Post-implementation audits of capital projects
 Sensitivity analysis and uncertainty
 Monte Carlo simulation techniques in budgeting
DAY 3 – Cost Volume Profit Analysis
 Identifying relevant and irrelevant costs in complex decisions
 Complex applications of C-V-P analysis
 Multiple products and services C-V-P
 Evaluating C-V-P before and after implementation
 Special sales orders and/or segment analysis
 Make or buy decisions
DAY 4 – Full Costing, Marginal Costing and Activity Based Costing
 Understanding full and marginal costing, a comparison
 Understanding cost behaviors, Direct and indirect costs in budgeting for decision making
 Role of costs in pricing strategies
 Overhead analysis and overhead allocation methods and difficulties
 Performance evaluation and variance analysis of materials, labour, & overhead in manufacturing and services
 Understanding advanced costing techniques such as Activity Based Costing (ABC) in manufacturing and services
DAY 5 – Budget Construction and Control
 Budgeting as part of planning process and as a communication process
 Nature and purpose of budgets for planning and control
 Budgetary control and variance analysis
 Responsibility centers: cost, profit and investment
 Segment reporting internally and externally
 An introduction to Activity based budgeting
 An introduction to Zero based budgeting