03100 Describe briefly what a budget is and critically discuss the main reasons for producing budgets.

Question 1:
a) Describe briefly what a budget is and critically discuss the main reasons for producing budgets.

b) Describe what bottom up` and top down` budget approach means. Critically discuss the main advantages and limitations with each approach and how the limitations can be reduced.

c) Incremental budget, Zero-based budget, Flexible budget, Rolling budget and Activity Based budget are different budget systems. Choose two and briefly describe its main features, and critically discuss its strengths and limitations.

Question 2:

Cost-Volume-Profit (CVP) analysis is among the most basic tools available to mangers. It is said to be quite simple and simplistic.

a) Draw a simple CVP graph and point the following categories: fixed costs, variable cost, total costs, sales/revenue and break-even` point.

b) Briefly explain the meaning of the term break even` point and discuss the different techniques that may be used to determine the break-even` point.

c) Describe the underlying assumptions of CVP analysis and provide an argument if CVP analysis is an adequate tool to make decisions.

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Question 3
"Balanced Scorecards need to be dynamic and flexible, able to accommodate the changes in organisational objectives, structure and markets that can be expected to occur during their lifetime." Cobbold (2001)

a) Define the Balanced Scorecard as developed by Kaplan and Norton (1992) and describe its four main aspects.

b) Critically discuss how the four aspects of a Balanced Scorecard may combine to promote flexibility and dynamism in either a private-sector or a public-sector organization. Indicate in your answer which type of BSC measures are, in your view, most important in promoting flexibility and dynamism.