BudgetsNathan West

A budget is one of the most important key elements for a business, it delivers a plan which will help keep everything balanced.

In business a budget is used to keep all the income and money spent in order and to give it a limit.In day to day life it is used to make sure you don’t spend more than you need such as house appliances and food & drink.

What can it help you accomplish ? If used successfully a budget can help the business reach its

objectives, and overcome obstacles whilst making a profit. This can also helps you with any financial problems.

A reason to have a good budget is to show possible ally's or employees that you can be depended on. If you are good at managing your money more company's will confront you.

To use a budget successfully you must look at your current balance of money and decide what you are going to spend the money on and the outcome. Then what else will need to be spent & how much needs to be left over.

A example of this is the creation of a game requires developers, and developers need software say your budget is £30,000 and there's a team of 30 developers which makes things progress much quicker and in more detail.

Say bundles of the software cost between £300-£700 all together with the developers ready to go the cost for the software between all of them would be round about £10,000 which is one third of the budget, which isn't that bad considering all that comes now is the market side of things such as how its going to be released, bonuses and in what way it will be published.

How do I produce my own Budget ? In order to create a successful budget with the least amount

of flaws you need to understand three concepts

Variable Cost

Fixed Costs

Break Even Point

Variable Costs In little detail Variable costs depend mostly on the money

the product makes and what it is used on, this varies in the stages of production and the sales the company makes.

An example of this is expenses that can be modified and that vary with each of the sales the company makes like the production of a game such as sonic the hedgehog. If all the software is bought and no more money can be spent that is a fixed cost, if the game doesn’t loose or make any money it is called the break even point and if the costs of things can be varied, such as better software that performs quicker cost a little extra than the one which was originally intended this is variable costs.

Fixed Costs This is where the budget can not be modified messed around

with and altered. A fix cost implies that no money other than the amount planned is spent, so no extras for better software or faster computers. An example of a fixed cost is if someone is producing a games console and they have the equipment to make it, they know exactly what its going to look like, how its going to work & what they are going to spend, then a new kind of material is introduced which is waterproof or doesn’t require a plug socket to run the console, they can not pay the extra for the waterproof material because they have to stick to the amount they agreed on leaving there console at risk of being ruined by water spills.

Break Even Point Break even point is when after all the sales and costs of all the

equipment the company doesn’t gain or loose any money, almost like they have just produced a product for free.

Some company's are happy with this method and use it. An example of a company using break even point is if a new Mario game is created and all the software for the developers, hardware and materials and printing is paid for and all together with it being a well known franchise costs allot of money to create, it verges on the edge of the consoles possible performance the graphics on the console are amazing and it roughly cost 800,000 to produce and market & then from sales the game makes 800,000 this is called a break even point meaning the game didn’t loose or gain any money.

Monitoring Monitoring a budget is one of the most important parts of marketing and

business, I gavered some information as to how monitoring a budget works and what the process is.

Adjust the sales and what is being spent every month to keep it in line with the current statistics. In order for someone to successfully monitor expenditure against the budget chosen, you need to know what the budget is built up of. You also need be aware of what areas the budget goes over what the expenditure is driven by.

http://www.bbk.ac.uk/fin/reporting/webreports/budgetmonitor