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Budgets
- 1. Types of BudgetNASEER AHMED COMMERCE DEPARTMENT UNIVERSITY O F BALOCHISTAN QUETTA.
- 2. Budgets Nature Time .Long Term .Short term . Current Budget Functions .Operating .Financial .Master Flexibility .Fixed . Flexible
- 3. Time nature Long 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 nature Industries like Cotton, Textiles uses the short term budgets Current Budget Months & weeks, Current activities,
- 4. On the basis of Functions- Operating Sales Budget Production Budget Production Cost Budget Purchase Budget Raw material Budget Labor Budget Plant Utilization Budget Manufacturing/Works Overhead Budget, Administrative & Selling Expenses Budget Program Budget Responsibility Budget
- 5. Contd.. Program Budget- Expected revenues Product/project are considered as major program, Locate where to reduce the cost & increase revenues, Determine the imbalances & inadequacies Corrective action can be taken Responsibility Construct the responsibility areas like Cost/Expenses centre, Profit centre, Investment Centre, Plans in terms of person, Control device
- 6. Functions - Financial Cash Budget Working Capital Capital Expenditure Income Statement Statement of Retained Earning Budget, Budgeted Balance Sheet or Position statement Budget.
- 7. Function-Master Various functional budget are integrated Summary budget incorporating its functional budget, Prepared by budget officer, Used to coordinate among the various functional department. Control device
- 8. Flexibility Fixed Units are overlooked Given level of activity Before the beginning of FY Anticipated changes are not adjusted, Suitable under static condition, Useful when sales, expenses & costs can be forecasted with great accuracy. Flexible Consists of series of budgets Varies with the level of activity attained. Prepared after considering the unforeseen changes, Difference between fixed, semi-fixed & variable cost.