Chapter 9   Budgeting and Budgetary Control

After this Chapter 9 from ‘Business Economics VI Groundbreaking’ you are familiar with various cost and revenue concepts, for example: sales result, capacity usage result, contribution margin in addition to efficiency losses, price advantages, unfit products variances, assortment variances, and so on. You are then able to give a thorough assessment of where benefits are being realised in your organization and where and by whom exactly money is lost. It is about finding the causes of the differences between the budget (a budget is a money-translated plan) and the realised result.

According to Tijhaar, any more than normal rejected product means a loss of “eenmaal de standaardkostprijs, aangenomen dat het afgekeurde product verder volledig waardeloos is i.e. once the standard cost price, assuming that the rejected product is completely worthless (Tijhaar, 1993, 146).” But every unit extra unfit product, I sign on, cannot be sold. And that means loss of profit margin in addition to the loss of standard costs during this period. In the opposite case: in the event of less unfit products than normal, the extra products will simply be sold. Tijhaar is then also making an extra profit. That is correct and no more than logical, but conversely Tijhaar makes a completely different and wrong calculation. That is not consistent; contrary to logic!

What we find in many textbooks and in all kinds of curricula is completely unnecessary ballast. With which everyone has more trouble than convenience. Know what you are doing. Do not enter data into formulas as a trained monkey.

No Greek word has been used in my elaborations of all exercises, and although factual formulas have indeed been used, everything is automatically drawn up along the lines of logic so that everyone can also understand the analysis made. There is no need for difference analysis rather just common sense. Remember, every analysis must be clear and transparent.

This book harshly criticizes out-of-date Business Economics textbooks.

You are very poorly trained in business economics even at Business Schools that ignore ‘Business Economics VI Groundbreaking’.

A self-study book, hardly needing a teacher. Necessary also for many managers in companies to improve their own performance.

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