|Goals and Types of Budgets|
Company budget is a process of activity control fund activity done by the company. As well as the company's budget objective is to estimate the cost of firm activity into the company's financial estimate.
The following are the objectives of the preparation of the budget:
- To express objectives, expectations, and target companies clearly and formally, so as to avoid losses and provide direction to management in achieving goals.
- To inform and communicate the objectives, expectations, and targets of management to the parties related to the company, so that the budget made can be understood, supported, and implemented.
- To provide a detailed plan of company activity with a view to being able to reduce uncertainty and provide clear direction to the parties concerned in order to achieve the company's objectives.
- To coordinate the ways or methods to be implemented in order to maximize available resources.
- To facilitate the measuring tools and control the performance possessed by the relevant individuals or groups, as well as provide information in determining corrective action for whether or not to be done.
The following are the types of budgets of an enterprise:
1. Sales budget
The sales budget is a budget that is detailed and researched about the sale of the company in the future, in it contains the plan types of goods, price, quantity, time and place of sale of the goods. The type of sales budget includes a sales plan during a typical budget time period of one year and expressed in units of money and amount
The purpose of the sales budget is made by the company so that it is able to predict future sales. In the company's budget drafting process, the sales budget is referred to as a key budget because it is considered as the basis for other budgeting.
2. Production budget
The type of production budget is a budget created for a budget period in which the budget contains the plans of the company unit. Production budgets are the cornerstone of making a production cost budget.
3. Raw material cost budget
This type of raw material cost budget is an indispensable budget in the running of the production process. The objective of the raw material budget is to be able to provide an estimate on the raw materials expressed in units of money as well as the number of raw materials.
Then from this budget, will be able to know the raw materials are budgeted and purchased. Raw material cost budget is used as a benchmark to create cash and profit and loss budgets
4. Direct labor budget
Direct labor budget objectives are used to estimate labor costs over the budget period and serve as a reference in cash and profit-loss budgeting. Generally, this budget has two basic calculations: wages per unit and hourly wages.
5. Budget factory overhead
This budget is used to estimate factory overhead costs over a period of time.
6. Inventory budget
This budget contains the company's inventory for a certain period of time. Inventory budget is a planned budget in detail and clears how the value and amount of inventory that still exist in the period to come. While the manufacturing company is divided into three types of inventory, among others:
- Material supply
- Supplies of semi-finished goods
- Inventories of finished goods
This budget consists of marketing budget and administration budget and general expenses. In each budget contains the estimated marketing, administrative costs and also general. The budget is used as a standard in cash and profit-making budgets.
8. Program budget
The program budget is the budget of a company activity that has been planned and prepared based on the company's main program in the form of product type. Program budget objectives are generally used in analyzing alignment within each company program.
9. Budget accountability
Budget accountability is the budget for an activity that is planned and prepared based on the responsibility center contained within the company. This accountability budget is used as a control tool used by managers.
10. Budget capital expenditure
The budget related to the plan for changes in fixed assets of a company within the budget time period is called the capital expenditure budget. This budget is made on the basis of sales estimates and is used as a standard for corporate budgets such as cash, factory overhead costs, and non-production costs.
11. Cash budget
The cash budget contains estimates of sources and cash usage over a period of time. The cash budget consists of operating budgets and capital expenditures and can serve as a standard in the preparation of the balance sheet. This budget is considered as important by the company because it can be used as a guardian of the company's liquidity.
12. The budget for profit and loss
This income budget contains estimated loss or profits during the budget period. This profit and loss budget is based on the operating budget and is also used as a benchmark for the preparation of the balance sheet.
13. Budgetary balance sheet
The balance sheet contains the financial position plan or the company's assets, debt and capital at the beginning and end of the period. The preparation of the balance sheet is based on the cash budget and the profit and loss budget and is used as a benchmark in preparing the budget for changes in financial position.
14. Budgets for changes in financial position
The budget of a change in the financial position contains the plan of changing debt, assets, and capital of the company during the budget period. The preparation of this budget is based on the balance sheet.
Such is the explanation of Goals and Types of Budgets. Thank you for visiting, hopefully useful.