UNIT 13: MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES

Table of Contents Task 1: Applying costs concepts to decision making process 2 1.1Explaining the importance of costs in pricing strategy 2 1.2 Designing costing and pricing system 2 1.3 Recommending proposal 4 Task 2 Application of forecasting techniques 5 2.1 Forecasting Techniques 5 2.2 Sources of Funds for the Expansion of ABZ Ltd 6 Task 3 Participating in the Budgeting Process 10 3.1 Selecting appropriate budgetary targets 10 3.2 Preparing Master Budget 11 3.3 Comparing Actual expenditure and income with master budget 12 3.4 Impact of Lack Budget Monitoring Process Policy 12 4.1 Process in Managing Cost Reduction 14 4.2 Potential for the Use of Activity-Based Costing (ABC) 15 5.1 Applying financial appraisal methods 16 5.2 Evaluating and recommending suitable project 16 5.3 Reporting appropriate strategic investment decision 18 Task 5 Interpreting Financial Statements 18 6.1 Analyzing Financial Statements 18 6.2 Applying Financial ratios 18 6.3 Recommending Strategic portfolio management 20 References 21

Task 1: Applying costs concepts to decision making process
1.1Explaining the importance of costs in pricing strategy
Cost can be looked upon as one of the most important elements of the process of taking pricing decisions and implementation of pricing strategies. Particularly, companies that adopt cost based pricing strategy, utilizes manufacturing and production costs as the basis of pricing (Brag, 2001). Cost considerations on the part of a company aids in fixing a price floor and price ceiling. Price floor and price ceiling are the levels of price in which price of a particular product varies according to internal and external business circumstances. For example if it observed that adoption of competitive pricing strategy keeps prices under price floor,