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budgets - Coggle Diagram
budgets
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two main approaches
historical budgets: use last year's figures as the basis for the budget, realistic as it is based on actual results, however circumstances can change
zero budgets: budgeted costs + revenues are set to zero, all expenditure has to be justified before approval, makes budgeting more complicated and time consuming, but potentially more realistic
variance analysis: calculating and investigating the differences between actual results and the budget
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revenue budget: expected revenues and sales, usually broken down into more detail
cost budget: expected costs based on sales budget, variable and fixed costs
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key performance indicators (KPIs): particularly for established businesses, lots of relevant data likely to be available
market research: trends in market size, growth, segmentation, product life cycles, competitor activity, customer feedback