8600-324 Understanding Costs and Budgets in an Organisation

Unit Overview

8600-324 Understanding Costs and Budgets in an Organisation is a unit within the ILM Level 3 module that focuses on ensuring that leaders understand the implications of costs in different areas of practice and responsibility. Organisations are guided by budgets that govern the allocation and utilisation of financial resources. The budgets are important within the organisation in ensuring that there is an image created of the cost-benefit analysis and financial constraints that must be considered when pursuing different organisational duties in various areas of leadership hence making this a critical unit for any leader or individuals tasked with the duty of overseeing the completion of a project within the organisation.

8600-324 Understanding Costs and Budgets in an Organisation is a unit that aims at building the understanding of the costs and their impacts on the budgeting process. It helps the leader sot ensure that they are able to build competencies and skills that revolve around being able to effectively utilise assigned and allocated financial resources to achieve the desired goals and objectives in their areas of responsibility.

Within this unit, learners are provided with mechanisms that they can use to effectively evaluate the budget against expenses they are using in their practices to ensure optimisation of performance. This unit aims at building the knowledge and understanding of costs and budgets in the organisation as required for practising or potential first-line managers within the organisation. It is taught in 7 hours of guided learning and contributes 1 credit value towards the completion of the ILM Level 3 module.

Suitability of the Unit

Practitioners within the organisations must be able to operate within the provided budgets, and in accordance with the cost, limitations and constraints that are put within the organisation. Hover, leaders, and managers have the primary responsibility of ensuring that individuals and teams in their areas of responsibility operate within provided budgets. The element of costs and budget is, therefore, a critical aspect in the operations and activities of leaders within the organisation. 8600-324 Understanding Costs and Budgets in an Organization is a unit that aims at building the capabilities, knowledge and skills that is required to effectively handle costs and budgets in the team, making this unit significantly suitable for leaders and managers overseeing activities of units or teams in the organisation.

The unit is designed to suit the specific need of first-line managers within the organisation. By pursuing this course, they develop skills to understand, evaluate and monitor expenditures and costs incurred in their areas of operation. However, the unit is highly versatile to other stakeholders. Leaders in departments, including the financial department within the organisation, can pursue the unit to build an understanding of the principles of costs and budget elements from the perspective of first-line managers. Middle and top managers also need this information to develop strategic and tactical decisions at their respective levels. The unit is also suitable for external consultants who support budget control and decision-making within the organisation, as it provides them with relevant information.

Learning Outcomes

Upon completion of the unit, the learners should be able to:

• Understand the importance of creating a budget and operating within it

• Describe the process of creating a budget and process of making agreements on the budget within the organisation

• Explain the process and methods that are used to collect information that is used in creating or revising budgets within the organisation

• Describe various methods that are used to monitor the differences or variances between actual and budgeted performance

• Show understanding of fixed and variable costs that are experienced within their areas of responsibility or in the organisation

• Understand the break-even concept in relation to their specific organisations

• Understand the purpose and nature of cost statements that are established within the organisation

• Show knowledge of values of standard costing and its significance as a control mechanism

• Describe mechanisms that are used to maintain control of costs within the organisation

Areas of Learning

8600-324 Understanding Costs and Budgets in an Organization is a unit that builds skills and knowledge on elements of budget and cost within the organisation, making this important in its content. As such, some of the main areas of learning that cover these elements include:

Understanding Budget

In this area of learning, the learners are introduced to budgeting and budget control. They are guided to understand the nature and purpose of budgets within the organisation and the significance of effective budgetary control within their areas of responsibility. In this area, learners are also guided to understand the methods that can use to monitor variance between actual performance and the budget that has been established, identifying the causes of variance and the impact that they could have on the organisation.

Through this information, learners are helped to develop critical thinking, which is applicable in setting up strategies opt to mitigate the effects of variance within the organisation. Lastly, learners are guided to appreciate the role of using information to develop and revise budgets in their areas of responsibility.

Costs Within the Organisation

This area of learning helps the learners to understand the different forms and nature of costs that can be incurred within the organisation. They are guided to differentiate between fixed and variable costs as well as show understanding of the concept of break event, which is critical in planning for the organisation.

The learners are also used to understand the cost statements that provide basic and important information on t eh cost elements of the organisation. In this area of learning, the learners are introduced to their role as managers in achieving the goal of cost control and ensuring that different areas operate within the acceptable costs. They are thereof retaught different mechanisms to maintain cost control within their organisation as well as the approaches to select the optimum method for their areas of responsibility.

Evaluation

The evaluation process for 8600-324 Understanding Costs and Budgets in an Organization is critical lain, ensuring the learners master theory and practice based on learned principles. In this unit, evaluation is conducted using a written assessment where the learners complete a template with questions on the topic to gauge accomplishment of learning goals and objectives.