IGCSE & A LEVELS GUIDE

Chapter 32 - Budgets Lesson Objective: To understand how to perform variance analysis It is obvious: budgets are controlling tools : At the end of every budget period there needs to be an assessment comparing the company's aims and the actual performance . This process is called budgetary control . Any differences found between the aims and the actual performance are to be investigated . This is called variance analysis and it's an important part of budgeting for several re

Chapter 32 - Budgets Lesson Objective: To understand what are budgets and its different methods Budgeting is a key financial process in any company. Budgeting is a detailed financial plan for a future time period taking into account the financial needs and the consequences of the plan . Both, costs and profit centers usually have 12-month budgets that are broken down by month. The main benefit of a budget is that it allows to assess the performance of each part of the o

Chapter 32 - Costs Lesson Objective: To understand the difference between full-costing and contribution costing Let's get started with the two costing techniques we are up to discuss by looking at: 1. Full Costing Technique (Absorption Costing) : a technique in which all fixed and variable costs are allocated to products, services, or divisions of the business On this technique the total overheads is divided between each product and cost centers on the proportion of total di

Chapter 32 - Costs Lesson Objective: To understand the basic concepts of costs before learning costing techniques What are the reasons cost data/information is so important for businesses? Why should managers have accurate cost data? Cost data is important for various reasons: Costs aid on pricing decisions ; Costs are also important for production decisions: Whether to stop the production of a product; Whether to increase production ; Whether to implement new methods; Wheth

Chapter 31, Costs Lesson Objective: To understand the importance of cost data and the break-even analysis Costs are of vital importance to businesses in general. It is one of the elements that dictates the amount of profit a business will ultimately make. On regards of costs it is important for us to understand a few main topics: The major uses of cost data ; The different classifications of costs of production; Break-even analysis. Simply put, cost data is key for business'

Chapter 30 - Forecasting and Managing Cashflows Lesson Objective: Managing inflows and outflows Having Cash Flow Problems is obviously bad for businesses. But what are the main reasons causing these problems to happen in the first place? Lower inflows and/or increased outflows: - Poor Credit Control : sometimes payments need to be chased after; - Long Credit Terms to customers ( payables ); - Unplanned/Fast Expansions : those are costly investments that just yield revenues o

Chapter 30 - Forecasting and Managing Cashflows Lesson Objective: To understand the basics of a cash flow forecast Cash Flow is the sum of cash inflows minus (-) the sum of cash outflows. It is the net amount of cash and cash-equivalents being transferred into and out of a business: The question repeats itself: can a profitable business run out of cash? It is a common problem : If the business does not plan its receipts (inflows) and payments (outflows) carefully it can bec

Chapter 29 - Business Finance Lesson Objective: To understand the various sources of finance available to businesses Where does business financing come from? There are basically three different sources: internal finance, external finance, and equity finance (which is a part of external finance). Let's look into them: Let's start by looking at Internal Sources of Finance : Retained Profits (RE): See Income Statement (p. 247) This is the part of the profit of the company that

Chapter 29 - Business Finance Lesson Objective: To understand needs of finance and working capital Businesses need financing... It's obvious. Every business needs financing. Lack of finance is one of the main causes of business failure ( bankruptcy ) which is the responsibility and lack of administration . Businesses bankruptcy oftentimes lead to liquidation , a process that aims to raise as much finance as possible to pay back those people and companies the bankrupt busines

You should know by know the different course of action businesses can take when operating with short or long-term excess capacity . You are also familiar with the problems of operating at full capacity. What are the different possibilities for a business when operating at full-capacity ( capacity shortage )? Increase Capacity by acquiring more production resources such as land, capital, and labor; Increasing capacity can be beneficial as it increases long-term capacity , en

Are there any aspects of your school's activities that could be outsourced? Would it be beneficial for the school to go that route? Capacity utilization: the proportion of the maximum output capacity currently being used. Your maximum possible output is determined by what all of your existing resources can produce in a specific time (land, capital, labor). There is a direct relationship between capacity utilization and fixed costs: High capacity utilization helps spreading f

Chapter 24 - Inventory Management Learning Objectives: To understand the ins and outs of inventory management We all know that businesses hold different amounts of different types of inventory : Holding inventories is not only costly but having efficient inventory control is key for business success. Businesses with inefficient inventory control systems run into some hairy problems: Run out of inventory to cover for unforeseen changes in demand; Remain with outdated or expire

Chapter 23 - Operations Planning Learning Objective: To understand the details of each different production methods There are many different factors that can influence operations decisions , those are: Marketing factors; Availability of resources; Technology; You should all know by know: (1) Marketing is the business department responsible for sales forecast . Why is an accurate sales forecast important for operations decisions , though? Based on the sales forecast operations

Chapter 23 - Operations Planning Learning Objective: To understand the differences between capital and labor intensive production Did you know there is a big difference between effectiveness and efficiency ? Efficiency is what we have been discussing in productivity so far: it is about producing at the highest ratio of output to input; Effectiveness , however, it is about meeting customers' needs profitably and being efficient in production is just one part of it: A compa

Chapter 23 - The Nature of Operations Learning Objective: To understand the basic concepts related to operations management What is Operations Management? Simply put, Operations Management is the process concerned with the use of resources (inputs) to create outputs: The process of Operations Management considers the following factors to be successful by adding value to products/services: Production efficiency: keeping costs low for competitive reasons ( value ); Quality:

Chapter 20 - The Marketing Mix, Promotion and Place Learning Objective: To understand the Place decisions within the Marketing Mix The Place decision refers to how products will go all the way from manufacturers to consumers . Place is connected to distribution , which can be defined as getting the right product , to the right consumer , in the most convenient way possible. Every business, therefore, needs to establish a distribution strategy . These are the 3 most common c

Chapter 20 - The Marketing Mix, Promotion and Place Learning Objectives: To understand sales promotions, digital marketing, and packaging. After discussing both: the objectives and the methods of advertising (targeted at increasing brand/product awareness) we now need to understand that promotion also include practices targeted at achieving short-term increase in sales - these are called Sales Promotion (below-the-line promotion) methods. Sales Promotions ( below-the-line

Chapter 20 - The Marketing Mix: Promotion and Place Learning Objectives: To understand the objectives of promotion and different types of ads It's time for us to start diving in the other two elements of the Marketing Mix: Place and Promotion! Keep in mind: promotion is a lot more than advertising ! Promotional activities are any activities that have the following objectives : Increase sales by increasing awareness: - Increase sales; - Increase customers' recall of the brand.

Chapter 19 - The Marketing Mix, Product and Price Learning Objectives: To understand the most common methods of pricing goods and services You should now be familiar with the Product Life Cycle, the Product Portfolio Analysis , as well as the impact of the different stages on Cash Flow : We now start the discussion of the second element of the Marketing Mix: Price ! Price is an important marketing decision: It determines the value added ; It impacts demand and therefore influ

Chapter 19 - The Marketing Mix, Product and Price Learning Objectives: To understand the Product Life-Cycle Analysis and the Boston Matrix Analysis Product Life Cycle / Product Portfolio Analysis The Product Life Cycle is the pattern of sales recorded by a product from launch to withdrawal - it is used for Product Portfolio Analysis , which is analyzing what businesses/products a company is holding at a certain moment and helps deciding where to allocate resources. Here is a