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actual expenses,
Current Year’s budget,
Current year’s projected year end,
drafting budget,
financial growth,
revenues
In this you can very well learn how the budget is being drafted. There are numerous variations, but the role of any budget is to clearly communicate revenue and cost centres so that the profit statements can be drafted and management of resources, including income , can be better accomplished.To that degree , all budgets tend to look the same.The Operational Budget will break revenue and expense components as three components which are mentioned as follows, First of all the main thing is Current Year’s budget which is to be originally projected from Income & expenditure. Next fall’s the Current year’s projected year end actual expenses and revenues. Even if it’s a guess, which tends to be as accurate as possible. The last phase is the next year’s budget, which tends to be a hybrid between the actual budget , the year-end projected actuals , and a best guess for what the new year will bring.If the year end projected actual fell short of the budget in terms of revenue, subsequently , the next year’s budget was modified to more realistic expectations.These were the three important phases of Budget which plays a vital role in every organization for their financial growth.
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Direct labor Costs,
Fixed Costs,
Indirect labor costs,
Semi Variable Cost,
Variable Cost
When budget getting for labor costs, the distinction to keep in mind is between direct & indirect. Direct labor costs are those incurred in any work on products or services that can be tracked readily , such as wages for assembly line workers. Indirect labor 
costs are for activities related to products or service that are not readily tracked, such as salaries for supervisors and support personnel. Both direct & indirect labor costs can be fixed or variable.
Fixed Costs are perhaps the most important costs to remain constant through out and are impervious to the cycle of business.The rent you pay from month to month is fixed costs because it doesn’t vary no matter what your sales patternmight be. To a large degree, salaries also are fixed costs, although they may have variable components in terms of performance bonuses.Utility costs are the same way.Any expenses that remains constant no matter the cycle of business is the fixed cost.
Variable Cost are little different and allow you some budgeting flexibility. These are costs that fluctuate directly with the amount of business you support. Variable costs are costs that are business dependent which include supply of goods and materials and to some degeree, part time labor necessary to keep the business operating aspace with demand.
Semi Variable Costs are expenses with components that are fixed and components that are variable. For example telephone expenses are semi variable cost.So its clear that you can now distinguish and understand various types of costs.
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Capital Budget,
expenditures,
expenses,
income from sales,
investments,
revenues
Every budget will have two main sections, and a good manager will come to know each of these sections as intimately as his or her own family. The first section measures company revenues or income from sales, investments and any other sources. You need to match up your expected revenues with your expected expenses, the other main part of the budget.
A Capital Budget sets aside funds for capital expenditures. These are primarily new places of equipment or facilities, to be used over a period of years. Strategic in nature, a capital budget involves looking at the long term profit that’s likely to come from investing in that building or equipment. 
The revenue sections real job is to measure revenue projections what a company thinks its going to earn through all its resources throughout the cycle of budget, so that it may balance expenses against them. So that it may balance expenses against them. Unless there is a sound strategic reason for it , a business without a positive bottom line won’t likely be business very long . Expenses may be higher than revenues in certain months, but the goal is always to make sure revenues exceed expenses by the end of the year.
When it comes to the expenses side of the budget, the more detail that can be included within reason, the more accurate a view the budget will provide of the films financial condition. Most important, managers will be able to control cash flow better when they have a deeper level of information at their finger tips.
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achive its objectives,
Budgeting Steps,
company goals,
effective Budgeting
Like any plan, a budget requires more than sitting down, crunching out some numbers that add up to a positive bottom line, and handing it over to the accounting department to plug in. Effective budgeting required thought, careful planning and a look at issues beyond the numbers. Consider the following components when you budget:
What Company goals does the budget embrace? These goals usually include Profitability, but they also include investing in the company’s ability to develop new product and service offerings to customers to assure the company will be around tomorrow. Nearly all budgets help managers develop a balance between making money today & making money tomorrow.
What Objectives are identified in the budgets? Goals are important, but can only clearly identified performance objectives will make them happen. Objectives clearly spelled out are crucial so that all parts of the company understand and pursue the same goals.
Define Tactics that will help a company achieve its objectives. Goals and objectives can be achieved only if the company sets out a tactical game plan. There are different ways to get from point A to Point B and company’s success will depend on choosing effective tactics to reach those goals. The cost of pursuing those articles also will be the part of the overall budget, reflected as a part of doing business.
Identify Procedures to help achieve that goal. Procedures are to tactics what objectives are to goals. They are more specific, more optionally oriented – almost mechanical. These are budget concerns and can be measured by financial impact on your company of both revenues and cost generated.
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Long-Term Budget,
Longer Lived Budgets,
Operational Budget,
Short-Term Budget,
Strategic budget
Budgets, like business plans, come in different makes and models depending on the purpose for which a company wants to use them. If its purpose is to plan strategies for the future, the company uses a long-term budget to set general goals for the next five or ten years. If its purpose is to plan the details of its operations, the company prepares a short-term budget , generally for a single year, smart managers will revise them periodically, as cnditions change.
1) The one-year budget is most commonly known as an operational budget, designed to help a company or departm
ents within that company get through one more year of sales and production cycles with some semblance of financial success. The 12-month time frame does make the budget somewhat strategic in nature, but by and large its purpose is to anticipate and the plan for coming issues and trends within the business year.
2) Longer business cycles require longer-lived budgets. Even though they may be subject to review and revisions, some items or operations unfold more fully over a longer time period. This results in a longer-time or strategic budget. While the operational budget anticipates financial flow for a year or less, the strategic budget reacts more intrinsically with a company’s long term business plan. The net effect may be a less precise, but more comprehensive approach to financial management. Not all companies need to create a strategic budget. Your company may be one of those happy to project from year to year, knowing that retained earnings and reserves may be all you need to set the stage for the subsequent year’s financial growth. On the other hand, if the company is involved in major capital acquisition that will depreciate over time, includes extensive research and development that runs up expenses for years before any revenue might be realized from the project, or involves extensive investment plans that will take several years to bear the fruit, then a strategic budget may be more appropriate.
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Budjet,
Budjeting,
cost of living,
operating,
planning
Like any other strategic direction and business plan, every company requires a financial plan to face the future . The company and departmental budgets are manifestation of that plan , a year-long look at the peaks and valleys of sales and expenses, the projection of cash flow(or lack of same) and the financial direction a company will take over the next 12 months."A budget is defined as a plan or schedule that estimates the cost of living or operating during a certain time period. That’s budgeting in a nutshell."
Although time periods vary, 12 months is the most common cycle and the most pratical time frame for budgeting. It correlates with the tax cycle and covers all four operating quarters. Anything shorter, while Useful, may not anticipate all the bumps in the road a business will face.
The budget your family kept when you were young revolved around savings and expenditures, charting the ebb and flow of resources and supplies . when it comes to a company’s budget , things grow a little more complicated, but the principles are the same budgets predict sales and other revenue (income) and production and operating costs (expenses),and the difference between the two(the company’s profit or loss ). The budget is the tool for estimating those numbers, and hopefully help ,managers prevent losses. And, working in tandem or as part of the business plan, it sets goals for either or both. Budgeting is that simple. And it’s that important .
In my following posts lets get deep into various phenomenons of budgets .......
