Budgets
Introduced| English | Meaning |
|---|---|
| budget/ˈbʌdʒɪt/ | A financial plan setting out expected income, expenditure or resource use over a period. |
| income/ˈɪŋkʌm/ | Money received by a person or organisation over a period. |
| expenditure/ekˈspendɪtʃə/ | Money spent on goods, services or other purposes over a period. |
| variance analysis/ˈveərɪəns əˈnæləsɪs/ | variance analysis |
| variance/ˈveərɪəns/ | In budgeting, the difference between a planned or expected financial value and the actual result. |
| favourable/ˈfeɪvərəbl/ | favourable |
| adverse/ædˈvɜːs/ | adverse |
| inflexible/ɪnˈfleksɪbl/ | inflexible |
Planning with numbers
- "Spend sensibly" is useless advice without a target. Businesses plan their finances with budgets 预算.
- A budget turns objectives into concrete financial targets — and a way to check progress.
Budget control cycle
Follow how a budget becomes a control system, not just a number.
A budget is:
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A budget plans expected income, spending or profit.
What a budget is
- A budget is a financial plan for the future: expected income 收入, spending, or profit.
- Common types: a sales/revenue budget, an expenditure 支出 budget, and a profit budget.
The break-even point is where total revenue equals total cost
Budgeted cost is 4,000 and actual cost is 4,300. What is the size of the variance?
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Variance = |4300 − 4000| = 300 (adverse, as cost rose).
Actual sales above the budgeted figure is a variance that is:
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Higher-than-budgeted revenue is a favourable variance.
A variance where the actual result is worse than budgeted is called ______.
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Adverse = worse than budget; favourable = better.
Variance analysis 差异分析
- A variance 差异 is the difference between the budgeted and the actual figure.
- Favourable 有利: better than budget (higher revenue, lower cost). Adverse 不利: worse than budget.
Worked example. Budgeted cost 5,000; actual cost 5,600. Variance = 600 adverse (costs were higher than planned). Budgeted sales 8,000; actual 8,500 → 500 favourable.
Which are benefits of budgeting? (Select all that apply.)
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Budgets aid planning, control and motivation, but cannot guarantee profit.
Why budgets help
- They aid planning, control and motivation (clear targets).
- But they can be inflexible 缺乏弹性 and may demotivate if set unrealistically.
A favourable variance isn't always good news. Spending far below budget might mean under-investment (e.g. skipping maintenance) that causes problems later. Always ask why a variance arose.
You've got it
- a budget is a financial plan: expected income, spending or profit
- a variance = budgeted − actual; favourable (better) or adverse (worse)
- budgets aid planning, control, motivation — but can be inflexible