2. The responsibility for budget for budget direction and
execution is usually placed in the hands of the Budget
Committee which reports to the top management
In large companies the in-charge of Budgetary
Committee function includes the sales manager,
personnel manager, the production manager, the
finance manager, the chief engineer, the treasurer and
the chief accounts officer.
3. The principal functions of the budget committee are to:
Decide the companies general policies and objectives.
Receive and review individual budget estimates
concerning different departments or units.
Suggest changes, modifications in accordance with
organizational objectives
Approve budgets which act as an authority for
department action
Receive and analyze performance reports regarding
the implications of the budgets
Suggest corrective actions to improve efficiency and
achieve budgetary goals. budgetary goals.
4. A budget manual is a document which defines the
responsibilities of persons engaged in a budgetary
programme and sets out the routine, the forms and
records required under budgeting.
Budget manual specify the procedures to be
followed in developing the budget and reports of
the budget information and actual operating data
to be used
5. The budget period is an important factor in
developing an comprehensive budgeting programme.
This is the periods for which forecasts can reasonably
made and budgets can be formulated.
The length of the budget period depends on the type
of the business, the length of the manufacturing cycle
from raw material to finished product, the case or
difficulty of forecasting future market conditions and
other factors.
6. 1.Short-range budget
2.Long-range budget
1.Short-range budget:
Short-range budgets may cover periods of three, six or
twelve months depending upon the nature of the
business.
Most firms use one year as the planning period.
Wholesale and retail firms usually employ a six-
month budget which is related to their selling seasons
7. The following factors should be considered:
The budget period should be long enough to cover
complete production of various products
For business of a seasonal nature, the budget period
should cover at-least one-entire seasonal cycle.
It should provide adequate time to arrange the funds
for production and other purposes
The budget period should coincide with the financial
accounting period to compare actual results with
budget estimates
8. 2. Long-range budget:
Long-range budgets or plans are neither described
in terms of précised terms, nor are they expected
to be completely coordinated future budgets.
They cover specific areas, such as future sales,
future production, long-term capital expenditures,
extensive R&D programs, profit forecasts etc
They evaluate future implications associated with
present decisions and help management in
making present decisions and select the most
profitable alternative.
9. Long-range budgeting doesn’t eliminate risk
altogether: : it only reduces the risk to a level which
doesn’t hamper the production and achievement of
company objectives.
There are many factors while considering an long-
range budget such as market trends, economic
factors, growth of population, consumption pattern,
industrial production, national income, governments
economic and industrial policy etc.
