Current budgets are prepared for the current operations of the business. The planning period of a budget generally in months or weeks. As per ICMA London, “Current budget is a budget which is established for use over a short period of time and related to current conditions.” … Read the rest
A master budget is projected financial plan. It displays the consolidation of the functional budgets to present the overall impact of the projected operational activities on the profitability of the organization as whole. It is a statement showing the estimation of revenue, costs and profit (loss) for the organization during the budget period.
The following… Read the rest
A budget key factor or principal budget factor is described by the CIMA London terminology as: “a factor which will limit the activities of an undertaking and which is taken into account in preparing budgets”. The limiting factor is usually the level of demand for the products or services of the undertaking but it could be a shortage of one … Read the rest
To line up the various functions of the Budget Committee, to bring them together and to co-ordinate their efforts in the matter of preparation of target figures, there should be a person usually designated as the Budget Controller, who can provide ready data relating to all the functions. He is more or less the secretary to the budget committee. The … Read the rest
A budget manual is a document that sets outstanding instructions governing the responsibilities of persons and the procedures, forms and records relating to the preparation and use of budgets and it is a booklet containing standing instructions regarding the procedures to be followed and the time schedules to be observed.
The following are some important matters dealt with in the… Read the rest
Plant Utilization Budget is budget prepared for the estimation of plant capacity to meet the budgeted production during the budgeted period. It is a forecast of plant capacities available for fulfilling production requirements as specified in the production budget. This budget is expressed in working hours or other convenient units.
Budgetary slack is the process by which managers seeks to obtain budget targets that can easily be achieved by understating revenues and/or overstating costs.
The following are ways in which budgetary slack arise:
manager avoid risky but profitable projects
managers negotiate for lower targets
managers dispute performance assessment results… Read the rest