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Economics and Marketing

Economics and Marketing
9
Jul

Labor costs in a budget

1. Labor costs consist of the wages, salaries and honoraria paid to individuals directly involved in implementing the project.

2. Labor costs are calculated by multiplying the personnel time needed in the project by the unit cost of the resource. The unit costs for personnel are usually in hours or days.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/the-connection-between-budgeting-and-accounting/11-labor-costs-in-a-budget
9
Jul

The basic elements of a budget

1. Expenditure, in any budget, is shown in three categories:

a) Labor

b) Materials

c) Services and,

in some budgets there will be: Income within each element of the budget the items will be:

1.Fixed costs: expenses that stay the same regardless of the amount of activity in the project

2.Variable costs: expenses that increase with the level of activity in the project

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/the-connection-between-budgeting-and-accounting/10-the-basic-elements-of-a-budget
9
Jul

Using the budget

1.Once a budget has been developed and approved, it is important that the manager use the budget: it is a living document.

2. The budget document should not be placed in a drawer and left there for the duration of the project. It is continually reviewed and compared with the actual operations of the project.

3. Financial reports accumulate the income and expenditure for a project in a form that is useful to the project manager.

4. To assist the manager financial reports must show for each item in the budget the:

a) amount budgeted

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/the-connection-between-budgeting-and-accounting/9-using-the-budget
9
Jul

The connection between budgeting and accounting

1. The purpose of budgeting is to create a financial plan for a project – a financial plan that is based on a sound operational plan directed at achieving well defined goals.

2. Management accounting records all financial transactions during the operation of the project.

3. Management accounting also prepares reports of these transactions and shows their variance from the budget.

4. The manager continually reviews the accounting reports and identifies where the actual operations are deviating from the budget.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/8-the-connection-between-budgeting-and-accounting
8
Jul

The types of accounting

1. In any organization other than small ones, there will be a person, or section, that handles the accounts of the organization.

2. This person or section provides the organizational accounting.

3. The finance section records and reports on the organization’s financial performance.

4. At the unit or project level, the manager needs to accumulate and report on financial activities – this accounting is referred to as management accounting – that which the manager conducts within the section or project to assist with immediate management.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/7-the-types-of-accounting
8
Jul

The role of accounting

1. The purpose of any accounting system is to record, classify and report financial transactions.

2. The purpose of any accounting system is to provide managers across the organization with information that facilitates:

a) Control of activities and expenditure

b) Refinement of operational plans

c) Accountability

d) Reporting on project outcomes, and

e) The writing of bids for new funds.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/6-the-role-of-accounting
8
Jul

The benefits of an effective budget

1. When an effective budget has been created it is a powerful tool for the manager to use during the project implementation.

2. The budget’s creation has already been used to:

a) Plan all activities

b) Ensure all activities are necessary

c) Cost each activity

3. In addition, during the project’s implementation, the budget provides a basis for the manager to evaluate activities and staff performance.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/5-the-benefits-of-an-effective-budget
8
Jul

What is a budget

1. The budget is a translation of plans into “money terms”; that is, the budget expresses the resources needed to achieve each activity that will occur during the project.

2. To be effective, a budget must be goal-oriented and realistic – all activities must be directed towards and necessary for achieving the project goals.

3. The activities must be realistic and the allocation of resources to the activity must also be realistic.

4. The development of a budget requires managers to:

a) clearly define all activities

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/4-what-is-a-budget
8
Jul

The Financial cycle

1. Financial management starts with the 

clearly defined goals of the project.

2. These goals are used to develop a plan of action to achieve them – a plan that is realistic, able to be assessed and is the most efficient way of achieving the goals.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/3-the-financial-cycle
Photo Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/planning-and-control/3-the-financial-cycle
8
Jul

Planning and control

1. There are two crucial aspects to the management of any project – ‘planning’ and ‘control’.

2. These are essential functions for every successful manager – without them, projects are generally not successful, not completed on time, or cost more than they should.

3.The successful manager must always ensure that projects are based on excellent plans and followed by good control during implementation.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/component/content/article/2-planning-and-control
8
Jul

Quality financial management in agriculture based projects

1. Financial practices are important to any enterprise and projects within agricultural organizations are no different – success can only be achieved when all activity is based on sound financial principles and quality financial management.

2. Managers must ensure that they put forward the best case possible to obtain funds and, once the funds have been allocated, they must ensure that the funds are spent according to the plan.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/component/content/article/1-financial-management/1-quality-financial-management-in-agriculture-based-projects
8
Jul

Financial management

1. Financial practices are important to any enterprise and projects within agricultural organizations are no different – success can only be achieved when all activity is based on sound financial principles and quality financial management.

File Courtesy: 
http://www.knowledgebank.irri.org/economics/index.php/component/content/article/1-financial-management/1-quality-financial-management-in-agriculture-based-projects
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