A Sum of money Allocated For A Particular Purpose A Summary Of

Budgeting

Budget 

A sum of money allocated for a particular purpose



A summary of intended expenditures along with proposals for how to meet them



A comprehensive plan in financial terms for operations and resources of an organization for a specific period time in future

Budgetary Control One of the three main functions of management is to control.  Budgets are useful in controlling operations 

T GE

F ST INA A N TE C M IAL EN TS

D BU

The use of budgets to control operations. Compare actual results with planned objectives.

Budgetary Control Reporting System

Budget - Types  

Master Budget The comprehensive and coordinated budget Master Budget

1. Operation budget Physical Activities 2.

Financial budget expected cash receipts & payment, financial positions etc

3. Special purpose

1. Static budget 2. Flexible budget



A. Operation Budget 1. 2. 3. 4. 5. 6.



Sales budget Production budget Purchase budget Labour budget Manufacturing expense Administration expenses

Financial budget 1. 2. 3.

Cash Budget Budgeted financial statement Budgeted retained earning

Static Budget

Illustration 7-6

A projection of budget data at one level of activity. Tata Steel Overhead Budget (Static) For the Year Ended December 31, 2002 Budgeted BudgetedProduction Productionin inunits units Budgeted Costs Budgeted Costs Indirect Indirectmaterials materials Indirect labor Indirect labor Utilities Utilities Depreciation Depreciation Property Propertytaxes taxes Supervision Supervision

10,000 10,000 $$250,000 250,000 260,000 260,000 190,000 190,000 280,000 280,000 70,000 70,000 50,000 50,000 $1,100,000 $1,100,000

Flexible Budget

A projection of budget data for various levels of activity.

Flexible Budget

 

Activity Activitylevel level

 

Variable Variablecosts costs Indirect Indirectmaterials materials($1.50) ($1.50)$12,000$13,500$15,000 $12,000$13,500$15,000$16,500$18,000 $16,500$18,000 Indirect labor ($2.00) 16,00018,00020,000 22,00024,000 Indirect labor ($2.00) 16,00018,00020,000 22,00024,000 Utilities 4,000 5,500 Utilities($.50) ($.50) 4,000 4,500 4,500 5,000 5,000 5,500 6,000 6,000 Total variable 32,000 36,000 40,000 44,00048,000 Total variable 32,000 36,000 40,000 44,00048,000

 

 

Fixed Fixedcosts costs Depreciation Depreciation Supervision Supervision Property Propertytaxes taxes Total fixed Total fixed Total Totalcosts costs

8,0009,000 8,0009,00010,00011,00012,000 10,00011,00012,000

15,00015,00015,000 15,00015,00015,000 10,00010,00010,000 10,00010,00010,000 5,000 5,000 5,000 5,000 5,000 5,000 30,000 30,000 30,000 30,000 30,000 30,000

15,00015,000 15,00015,000 10,00010,000 10,00010,000 5,000 5,000 5,000 5,000 30,000 30,000 30,000 30,000

$62,000$66,000$70,000 $62,000$66,000$70,000$74,000$78,000 $74,000$78,000

Cash Budget  

 

 

 

 

Receipts

 

 

 

 

Opening balance  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

Payments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

Closing balance

 

 

 

 

Flexible Budget Activity Level

 

 

 

 

 

Variable Cost  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Fixed Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Cost