In order to execute your organization's strategy, you need a comprehensive budgeting process that defines the financial implications of company goals, operational tactics, and market dynamics. You can make budgeting more effective if you understand the behavior of your organization's fixed, variable, mixed, and step costs.

Identifying your organization's costs will help you perform a variety of activities that support the budgeting process, from forecasting future costs to determining whether your business is at risk when economic conditions fluctuate. Organizations often overlook cost behavior, but you can incorporate it into your budgeting process in a number of easy ways. You'll be rewarded for your efforts with a more accurate budget that you can use to make better business decisions.

Use the following information and tools to help you define costs in your organization and account for cost behavior in the budget process.

• Understand cost behavior to help you budget (Article)
  Learn about different types of costs and how they affect critical budgeting activities.
• Use Excel to separate fixed and variable costs (Article)
  Use the linear regression function in Excel 2003 to identify your fixed costs and variable costs.
• Step costs graph (Template)
  Evaluate step costs for your business to create a more robust and accurate budget.