SINHGAD TECHNICAL EDUCATION SOCIETY’S

RMD SINHGAD TECHNICAL INSTITUTE CAMPUS

RMD SINHGAD SCHOOL OF MANAGEMENT, STUDISE,
WRJE. PUNE.
CONCUREENT EVALUTION BATCH 2021 – 23
SEM – 1 SUBJECT NAME – ABD (MA)
GROUP NO : 14
ROLL NO AND NAME OF STUDENT
118 kachare akshay chandrakant
119 kadu utkarsha uddhao
120 kakade vaishnavi navnath
121 karad amol manik
122 kate vishwajit anil
123 kirpe nikil sudam
124 kondhalkar pooja rajeesh
125 kulkarni mrunmayee sanjay
126 kulkarni smita waman
127 kumar akshay narendra charahate
FUNCTIONAL BUDGET :

A functional budget is a budget which relates to any of the

fuctions of an undertaking, Fuctional budget are associated with the
fuctions of an organization. Example of fuctional budget include sale
budgets, production budget, labor budget, cost budget,overhead
budgets, capital expenditure budget, and cash budgets.
Types of fuctional budget :
1. Sales budget
2. Cash budget
Sales budget :
This budget is based on estimated sales during the budget
period. It is also known as the backbone of the organization. The
sales budget is the starting point for budgeting; all other
budgets are based on the sales budget. The sales manager is
responsible for preparing the sales budget. Sales budget is
primarily concerned with forecasting of what products will be
sold in what quantities and at what prices during the budget
period.
 Objectives of sales budget :
1. Planning :
The company formulates marketing and sales objectives; the budget determines how these objectives will be met through a detailed
breakdown of the sales budget among products, territories and customers.
2. Co- ordination :
The budget establishes what the cost of various he ads b thereby maintaining a desired relationship between expenditure and
revenues.
The budget enables sales executives to coordinate expenses with sales. It also restricts the sales executives from spending more that
their share of the funds helping to prevent to expenses from getting out of control.
3. Control : The sales budget enables sales executive for evaluating sales performance a sales manger can improve his success by
meeting sales and cost goles set forth in the sales budget.
4. Evaluation :
Sales department budgets become tools to evaluate the department ‘s performance . By meeting the sales and cost goals set forth in
budget, a sales manager may proof himself to be a successful executive .
 Advantages of a sales budget
 A sales budget offers the following benefits:
 It is helpful in farming sales progaramming so as to achieve the sales target of the
firm.
 It is useful in allocation of resources to different products, sales territories, etc. for
realising the forecast sales.
 It is helpful in keeping expences under control so that the objectives of the net
profits are achieved.
 It serves as a yard stick for evaluating progress and sales performance of the
company .
 It can reveal the areas / products in which the comapany needs to strengthen its
position.
Format of the sales budget :
The basic calculation in the sales budget is to itemize the number of units sales
expected in one row, and then list the average expected unit price in the next row,
with the total sales appearing in a third row. The unit price may be adjuested for
marketing promotions.
E.g. Quarter 1 Quarter 2 Ouarter 3 Quarter 4
Forecasted unit 5,500 6,000 7,000 8,000
sales
X price per unit $10 $10 $11 $11

Total gross sales $ 55,000 $60,000 $77,000 $88,000

Sales discounts & $1100 $1200 $1540 $1760

allowances

= Total net sales $53,900 $58,800 $75,460 $86,240

 Production Budget:
 Meaning:
 Managers use the production budget to estimate how many units they will need to produce
in future periods based on the future estimated sales numbers. They also use this report as a
planning tool for future production processes, machine times, and scheduling. Production
managers have to estimate the future demands and plan out the workflow to make sure
everything is produced timely and there aren’t long periods of wait time or down time.
 This is the main reason why the production budget does not show the costs  of production
nor the sales revenue from the estimated sales during the period. Instead, it always shows
the total estimated sales in units and the budgeted number of units produced. Remember,
this is a report used to determine the number of units that need to be produced during the
period. The sales budget and manufacturing budget are used to estimate the total revenues
and expenses for the period.
 Advantages of considering the factors while preparing the production budget .

 While preparing the production budget, the factors like estimated sales,

availability of raw materials, plant capacity, availability of labor, budgeted stock
requirements etc. are carefully considered.

 Factors of production refers to resources used to produce or create finished products

and services to keep the market economy afloat. 
 The four common production factors in economics are land, capital, labor, and
entrepreneurship/enterprise. Modern economics considers time and information also
part of these factors.
 Adam Smith, also known as the Father of Economics, associated the production
concept with the creation of material goods only. However, modern economists
defined the production process as creating or adding value to the products.
 The ownership of these factors varies with the society, industry, and economic system
(capitalism and socialism).
Format of Production budget

Format and Example

The following example illustrates the production budget format. The expected sales
units are obtained from the production budget of Company A. The planned ending units
of 1st, 2nd and 3rd period are the beginning units in 2nd, 3rd and 4th period respectively.
1 2 3 4 Year
Budgeted Sales 1,320 954 1,103 1,766 5,143
Units
+ Planned 210 168 213 225 225
Ending Units
− Beginning −196 −210 −168 −213 −196
Units
Planned
Production in 1,334 912 1,148 1,778 5,172
Units
Thanks!