Types of Budget

Types of BudgetNaseer Ahmed Commerce department University o f Balochistan Quetta.1BudgetsTime natureLong term-5-10 years,Top level management,Used by those industries where gestation(dev. period) period is long,Mostly done in R&D, long term finances etc.Short term-1-2 yrs,Monetary natureIndustries like Cotton, Textiles uses the short term budgetsCurrent BudgetMonths & weeks,Current activities,

On the basis of Functions-OperatingSales BudgetProduction BudgetProduction Cost BudgetPurchase BudgetRaw material Budget Labor BudgetPlant Utilization BudgetManufacturing/Works Overhead Budget,Administrative & Selling Expenses BudgetProgram BudgetResponsibility Budget

Contd..Program Budget-Expected revenuesProduct/project are considered as major program,Locate where to reduce the cost & increase revenues,Determine the imbalances & inadequaciesCorrective action can be takenResponsibilityConstruct the responsibility areas like Cost/Expenses centre, Profit centre, Investment Centre,Plans in terms of person,Control device

Functions - FinancialCash BudgetWorking CapitalCapital ExpenditureIncome StatementStatement of Retained Earning Budget,Budgeted Balance Sheet or Position statement Budget. Function-MasterVarious functional budget are integratedSummary budget incorporating its functional budget,Prepared by budget officer,Used to coordinate among the various functional department.Control deviceFlexibilityFixedUnits are overlookedGiven level of activityBefore the beginning of FYAnticipated changes are not adjusted,Suitable under static condition,Useful when sales, expenses & costs can be forecasted with great accuracy. FlexibleConsists of series of budgetsVaries with the level of activity attained.Prepared after considering the unforeseen changes,Difference between fixed, semi-fixed & variable cost.