Budgeting and standard costing

1. Budgeting and Standard
Costing
Muneeb Kiyani 1241
Arfa Yaqoob 1229
Ahsan Javed 1227

2. Contents
 Budget vs Budgeting.
 Imp of Budgeting.
 Budgeting Process.
 Budgeting Methods.
 Types Of Budgets.
 Standard Costing and its types.

3. Budget

4. Budget and Budgeting
 Budgeting is the process
of creating a plan to spend
your money. This spending
plan is called a budget
 Budget. Plan for future
activities prepare in
advance.

5. Why is Budgeting so Important?
budgeting allows you to create a spending plan
for your money, it ensures that you will always
have enough money for the things you need and
the things that are important to you.

6. Budgeting

7. Budgeting Methods
 Incremental Budgeting
 This budgeting method uses your business’s current budget
and adds a certain percentage, or increment, to it to arrive at
the new budget.

8. Incremental Budgeting
 Benefits…
 Easy to prepare, generalized budget
 Budgeting preparation costs are low
 Easy to understand
 Can reduce employee conflicts since all departments in a
business have the same amount of money to spend

9. Zero-based Budgeting
 Zero-based budgeting, is a popular way that people budget
for their own personal and household expenses, but it can
also be used for a business budget too.

10. Criticism on zero based Budgeting
 Time consuming
 Focuses on expenditures not on growth
 May sacrifice the future in favor of short term gains

11. Top Down Budgeting
 Top down budgeting is done from the highest level within a
business. You, along with any upper management you might
employ, look at the expense estimates and projected profits
of your business and create a budget accordingly.

12. Types of Budgets in Business
 Master Budget. A master budget is an aggregate of a
company's individual budgets designed to present a
complete picture of its financial activity and health.
 Operating Budget. An operating budget is a combination of
known expenses, expected future costs, and forecasted
income over the course of a year.

13. Types OF Budget.
 Cash Flow Budget. A cash flow budget is a overview of
expected income and expenses over a given period of time

14. Standard Costing
 Standard costing is an important subtopic of cost accounting.
Standard costs are usually associated with a manufacturing
company's costs of direct material, direct labor, and
manufacturing overhead.

15. Standard Costing
 Organization have to answering some questions…
 Why our profit is reduced?
 Who is responsible for this?
 Standard costing is not based on historical data like
budget.

16. Types of Standard Costing
 Current Standards…
 Current standard is a standard established for use over a
short period of time related to current condition

17. Basic standard
 Are those standards established for use over a long period of
time from which a current standard can be developed