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1.1 Explain how to calculate the estimated costs of activities, resources and overheads needed to achieve objectives

1.1 Explain how to calculate the estimated costs of activities, resources and overheads needed to achieve objectives
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  • Jun 17, 2022

1.1 Explain how to calculate the estimated costs of activities, resources and overheads needed to achieve objectives

Introduction: In this unit, learners will be given a deep understanding of how budgets are created. Along with that they will get to know how to calculate the estimated costs of activities, resources and overheads needed to achieve objectives.

What is a business budget?

Business budget is a financial plan which provides the organization with all the information that is related to the finance which includes expenses, expenditure, revenue, capital, etc. For any business, budget provides an estimation of how much money is spent in a particular time frame. The time frame could be monthly or yearly. Along with providing cash information, it also helps in determining how you should spend your money.

The purpose of budgeting

Forecast your earning

Creating a budget helps you in predicting and determining the amount of money your business is going to make in the form of revenue, profit, and sales.

Plan your expenditure

Budget helps you plan your expenditure based on how much money you are left with. You can assign a job with an authentic reason every buck you spend.

Hold yourself accountable

Creating a budget helps you analyze how much money you have spent and what was your plan of spending money. This helps you in evaluating whether you are spending money wisely and whether you are meeting your business goals and objectives or not.

The importance of creating budget

  • They stop you spending money in the wrong places
  • They help you get funding
  • Set goals for your organization
  • Helps in identifying your weak areas

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