Types of budget

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Types of budget

  1. 1. Sujoykrpaul<br />Assam University,silchar<br />Types of Budget<br />
  2. 2. Budgets<br />
  3. 3. Time nature<br />Long term-<br />5-10 years,<br />Top level management,<br />Used by those industries where gestation(dev. period) period is long,<br />Mostly done in R&D, long term finances etc.<br />Short term-<br />1-2 yrs,<br />Monetary nature<br />Industries like Cotton, Textiles uses the short term budgets<br />Current Budget<br />Months & weeks,<br />Current activities,<br />
  4. 4. On the basis of Functions-Operating<br />Sales Budget<br />Production Budget<br />Production Cost Budget<br />Purchase Budget<br />Raw material Budget <br />Labor Budget<br />Plant Utilization Budget<br />Manufacturing/Works Overhead Budget,<br />Administrative & Selling Expenses Budget<br />Program Budget<br />Responsibility Budget<br />
  5. 5. Contd..<br />Program Budget-<br />Expected revenues<br />Product/project are considered as major program,<br />Locate where to reduce the cost & increase revenues,<br />Determine the imbalances & inadequacies<br />Corrective action can be taken<br />Responsibility<br />Construct the responsibility areas like Cost/Expenses centre, Profit centre, Investment Centre,<br />Plans in terms of person,<br />Control device<br />
  6. 6. Functions - Financial<br />Cash Budget<br />Working Capital<br />Capital Expenditure<br />Income Statement<br />Statement of Retained Earning Budget,<br />Budgeted Balance Sheet or Position statement Budget. <br />
  7. 7. Function-Master<br />Various functional budget are integrated<br />Summary budget incorporating its functional budget,<br />Prepared by budget officer,<br />Used to coordinate among the various functional department.<br />Control device<br />
  8. 8. Flexibility<br />Fixed<br />Units are overlooked<br />Given level of activity<br />Before the beginning of FY<br />Anticipated changes are not adjusted,<br />Suitable under static condition,<br />Useful when sales, expenses & costs can be forecasted with great accuracy. <br />Flexible<br />Consists of series of budgets<br />Varies with the level of activity attained.<br />Prepared after considering the unforeseen changes,<br />Difference between fixed, semi-fixed & variable cost.<br />

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