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Finance for IT Decision Makers - A practical handbook by Michael Blackstaff

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11 BUDGETING, COSTING AND PRICING: THE BASICS

OBJECTIVES

When you have studied this chapter you should be able to:

  • describe what is meant by budgeting and explain why it is such an important business activity, especially in departmentalised organisations;
  • explain how budgeting, sometimes called ‘responsibility accounting’, is used as a motivation and measurement tool;
  • distinguish between ‘capital expenditure’ and ‘revenue expenditure’, and give IT examples of each;
  • describe what is meant by costing and explain why it is such an important business activity;
  • describe what is meant by pricing and explain how costing information can be used as an aid to making pricing decisions.

The purpose of this chapter is to provide an introduction to three ...

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