DIFFERENT KINDS OF

BUDGET

JIGS MICHELLE P. PASAMONTE I

Reporter
 A budget is a detail plan of operations for a
specific period of time. In the present era everyone is
with the term budget because it essential in life. A
budget is prepared for the effective utilization of
resources, which will help in achieving the set
objectives. Budgets are also very important in individual
life, as it is important in business firms.

The following are the essential of budget:

• It is prepared in advance and is based on future plan

of action.
•It relates to a future period and is based on objectives
to be attained.
•It is a statement expressed in monetary or physical
unit prepared for the formulation of policy.
 TYPES OF BUDGET
1. Fixed Budget , often called a static budget, is not
subject to change or alteration during the budget period.
A company "fixes" budgets in at least two circumstances:

a. The cost of a budgeted activity shows little or no

change when the volume of production fluctuates within an
expected range of values. For example, a 10 percent increase
in production has little or no impact on administrative
expenses.

b. The volume of production remains steady or

follows a tight, pre-set schedule during the budget period. A
company may fix its production volume in response to an all
inclusive contract; or, it may produce stock goods.
 TYPES OF BUDGET
2. Variable or Flexible Budget is called
a dynamic budget. It is an effective evaluative tool for
a company that frequently experiences variations in sales
volume which strongly affect the level of production. In
these circumstances a company initially constructs a
series of budgets for a range of production volumes
which it can reasonably and profitably meet.

3. Partial Budget: Partial Budget aims to make

small changes in the financial condition of a corporation.
The process of Partial Budgeting involves a comparison
between the plus and minus effects occurring due to the
implementation of the proposed changes on the net
income.
 TYPES OF BUDGET

Partial Budgets are in fact helpful while

evaluating changes like:

- Improving the capital condition

- Expansion in the size of a company

- Searching for alternative companies, where

changes needto be introduced

- Employment of a custom operation, and not a

purchasing instrument

- Variations in the methods of productions

 TYPES OF BUDGET
4. Business Set Up Budget: A Business Set Up
Budget deals with the financial expenses required
during the establishment of a commercial firm or
enterprise. The expenses in this case include the costing
of the basic infrastructures. It is considered as one of the
fundamental means of introducing, improving and
maintaining a business house. Hence, it explicitly
studies the inflow of cash in the form of income, and
plans the expenses of the concerned organization, based
on the available funds in hand. Since a Business Set Up
Budget is only based on assessments of the expected
income and expenditures, the predictions and
calculations are subject to variations. Hence arises the
requirement of reviewing the budgetary documents
from time to time, to adjust the estimated facts and
figures with the actual ones.
 TYPES OF BUDGET
5. Administration Expenses budget: The
budget covers the expenses incurred in framing policies,
directing the organization and controlling the business
operations. In budget an estimate of expenses is
prepared regarding central office and of management
salaries. The budget may be prepared at department
level for effectiveness in budgeting system. The budget
can be prepared with the past experience and
anticipated changes.

6. Corporate Budget: formulates the annual

fiscal agendas, plans and programs of a commercial
organization. It works for putting forward the expected
income and expenditure figures of a company, for the
next financial year.
 A government budget is a financial plan to pursue the priority
programs and projects of the government and its development thrusts.

It is a tool for economic growth through its allocations for

infrastructure, agriculture, science and technology, and other areas
that will help generate employment and increase the country’s
productivity.

It is a tool to promote human development by investing in

basic social services like education, health and social welfare.

It is also an instrument for good governance, as implementing

agencies are accountable for the use of their given budgets by
delivering target results.
 2012 National Budget
P1.816 TRILLION
10.4% higher than the 2011 budget • 16.5% share of the country’s Gross Domestic Product (GDP)
Bulk Goes to Salaries (Allocation by Expense Class)
Personal Services
This will go to salaries and other compensation of civil servants. This
increased by 9.9 percent from 2011 due to pay hikes under the Salary
Standardization Law III, as well as additional allowances for teachers,
policemen, soldiers and others.

Maintenance and Other Operating Expenditures

This increased by 24.3 percent from 2011 to cover the expansion of
operating programs for social and economic services such as health
insurance subsidy for the poor, rice self-sufficiency and conditional cash
transfers.

Infrastructure and Capital Outlays

This will go to roads, bridges, ports and other vital infrastructure that
facilitate the movement of people, goods, services and information to
drive economic growth. This substantially increased — by 31.7 percent
— over last year’s allocation.
Support to Government Firms
Budgetary support for government-owned or -controlled corporations
(GOCCs), in the form of operational subsidy and equity infusion,
significantly increased by more than 100 percent from 2011. In
particular, additional support for GOCCs in the agriculture sector
increased in line with rice self-sufficiency goals.

Support to Local Governments

Support for local government units, particularly their internal
revenue allotments (IRA), unfortunately decreased by 3.0 percent
over 2011 as tax collections in 2009 decreased due to the global
financial crisis. IRA is computed as 40 percent of all internal revenue
taxes collected three years prior.

Debt Burden
The debt burden’s share of the national budget — particularly interest
payments to local and foreign creditors — decreased to 19.6 percent
from 22.6 percent in 2011 due to favorable interest and foreign
exchange rates.
 Allocation Per Region 2012

P770.5 Billion
The direct share of the regions in the national budget significantly
increased by 24 percent to P770.5 billion.
Luzon will still get the largest share of the total regionalized budget
at P399.5 billion, by virtue to size and population.
The shares of Visayas and Mindanao — which have a higher number
of poor families – increased significantly by 26.2 percent to P159.2 billion,
and by 28.5 percent to P211.9 billion, respectively.
No man is good enough to
govern another man
without that other's
consent.

- Abraham Lincoln -
END OF REPORT