Professional Documents
Culture Documents
Unit 14
Unit 14
COST
CONTROL
Budget
BUDGET – refers to the fund allotted for
the operation or certain projects.
A plan expressed in money. It is prepared
prior to the budget period and may show
income, expenditure and the capital to be
employed.
TYPES OF BUDGET
1. Sales budget
2. Production budget
3. Cost of Production budget
4. Purchase budget
5. Personnel budget
6. R & D budget
7. Capital Expenditure budget
8. Cash budget
9. Master budget
10. Fixed budget
11. Flexible
1. SALES BUDGET:
Sales budget is the most important budget
based on which all the other budgets are
built up. This budget is a forecast of
quantities and values of sales to be
achieved in a budget period.
2. PRODUCTION BUDGET:
Production budget involves planning
the level of production which in turn
involves
a. What is to be produced?
b. When is it to be produced?
c. How is it to be produced?
d. Where is it to be produced?
3. COST OF PRODUCTION BUDGET:
This budget is an estimate of cost of
output planned for a budget period and
may be classified into –
• Material Cost Budget
• Labour Cost Budget
• Overhead Cost Budget
4. PURCHASE BUDGET:
This budget provides information about
the materials to be acquired from the market
during the budget period.
5. PERSONNEL BUDGET:
This budget gives an estimate of the
requirements of direct labor essential to
meet the production target.
This budget may be classified into
–
a. Labor requirement budget
b. Labor recruitment budget
6. RESEARCHANDDEVELOPMENT
BUDGET:
This budget provides an estimate of
expenditure to be invest on R & D during the
budget period.
A R&D budget is prepared taking into
consideration the research projects in hand
and new R & D projects to be taken up.
7. CAPITAL EXPENDITURE
BUDGET:
This is an important budget providing for the
following factors:
a. Replacement of existing things.
b.Purchase of additional useful things to
meet increased production
Labor
Sales
Power and
energy
Advantages
Improve profit .
Competition .
Reduces cost and price
Stable and reasonable
prices.
Maintain higher sales.