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Yes, all budgets depend on sales budgets because budgets can't exceed the amount of available money. When sales are poor, the budgets will be smaller.
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Disadvantages of budgeting?
· Lack of Absolute accuracy: since budgets are projections and they are based on various assumptions. Budget estimates are therefore, devoid of absolute accuracy. · Mere preparation of budget does not suffice the purpose unless the management at all levels the responsibility for achieving the departmental goals laid down in budgets.
What are flexible budgets?
Flexible Budgets sound a bit like an oxymoron but really they're not. Budgets are usually built on an assumption or set of assumptions such as units produced, cargo moved, or customers helped. If these assumptions are achieved then the expenses anticipated in the budget should occur and variances calculated are valid. But, let's say that drastic change occurs in your industry rendering the assumptions upon which the budget was built hopelessly outdated. Examples of this could be the loss of a critical vendor or the influx of a major new customer. This would make comparisons of actual expenses to outdated budget expenses worthless. But flexible budgets can attempt to compensate for such changes by flexing the budgeted expenses based on changes to those underlying assumptions.Ok, here's a simplified example: You make widgets. You forecast with all known information at budget time that there will be a market for your widgets of 100 next year. It cost you $2 per widget to make so your expenses would be $200. As you cruise through second quarter your sales team pulls off the order of the century and now you anticipate selling 10,000 widgets. Yippie! But suddenly your expenses are through the roof - duh - and at year's end you have expenses of $19,000. Comparing this to the budget of $200 you have a negative variance of $18,800. Is that bad to have expenses of $19,000? No. Your budget is not reflecting the new reality of selling 10,000 widgets. Here's where flexible budgeting comes in. You establish what your budgeted expenses should "flex" on. In our case it would be widgets and by what relationship your expenses should flex. In our example above the relationship is $2 per widget. If your budget "flexed" on the number of widgets, the expenses would now be $20,000 and with this new number the variance calculation would make more sense. Hope this helps.
How are budget used in controlling operations?
First, the budget should be derived to support the strategy and business plans of the organization. If everyone meets budget on every account then the plans will be successful and all goals will be met. Thus properly prepared and coordinated budgets provide an important coordinating tool for any organization. Second, budget versus actual reporting provides early indications if actual operations are not going as planned. This provides an opportunity for management to get things back on track or coordinate changes to the plan.
Which of the following are true concerning budgets A.they are continuous.B.they are ongoing.C.they are about the future.D.all of the above?
D. They are all true.
What can you do to adjust your budget to fit the 3000 deductible?
Your question does not include enough detail and the answer would depend on what your income is and what your outgoings are both optional and fixed. Perhaps it would be best if you made an appointment to see a qualified accountant with all your paperwork.
Advantage of sales budget?
The sales budget is the most important budget, because it drives all of the other budgets (production, labor, manufacturing, cash).
What is the significance of sales budget in an enterprise?
Sales budget is the starting point of budgeting process because it provides the all important figure of budgeted sales data for production budgets and for all other budgeted financial statements.
What is sales budgeting and why is it important?
Sales budgeting is the starting point of budgeting process as in sales budget first of all the sales demand is determined and after that all other budgets are prepared to fulfill that demand.
Is the budgeted income statement prepared before the sales budget?
Budgeted income statement is prepared at the last after preparing all other budgets and sales budget is the starting point of budgeting process.
Purpose and meaning of sales budget?
Basically... * as a starting point for all other budgets * to set objectives for sales * allocate resources and finance * based on assumptions about the maket
Budget manual should be compiled after all budgets have been set.true or false?
Budget manual should be compiled after all budgets have been set.it is false
What is the Advantages of fixed budgets?
fixed budget is the budget whose all estimation is not changed after making this type of budget for more knowledge of budget == == == == == ==
What is the objective of sales budget?
Sales budget is the starting point for preparation of overall master budget for the whole organization as on behalf of different marketing surveys, company first of all tries to estimate how much sales are expected and after that they estimate that how much of number of units of product needs to be manufactured and for those manufacturing how much material required so if company don't know the sales figures how would they may be able to produce the product units and all other budgets as well.
How many presidents have never passed a budget?
All. Presidents do not pass budgets. Congress does.
Are there ever any sales on Budget Truck Rental trucks?
Budget Truck rentals has indeed had sales on their automotive. They sell all types of vehicles from previously owned and a few rentals that were used from Budget. All their sales are in good repair.
What does a budget look like?
A budget is usually a set of money put aside that is a limit for weekly, monthly, or yearly spending. Most budgets include all necessary expenses and a small miscellaneous fund.
Classification of budgets?
Master Budget The master budget is also known as The master budget is also known as the financial plan.. Master budgets form the basis of the control systems form the basis of the control systems in organizations. The master budget in organizations. The master budget may take the form of a profit and loss account and form of a profit and loss account and a balance sheet at the end of the a balance sheet at the end of the budget period. It shows the gross budget period. It shows the gross and the net profits and the important and the net profits and the important accounting ratios. Sometimes more accounting ratios.The master budget has two components: the operating has two components: the operating budget and the financial budget. The budget and the financial budget. The operating budget includes the sales operating budget includes the sales budget, cash collections from budget, cash collections from customers, purchases budget, customers, purchases budget, disbursements for purchases, disbursements for purchases, o p eratin g ex p ense bud g ets. operating expense budgets. . ‡FIXED BUDGET: Thisis defined as a budget which is designed to remain unchanged irrespective of the volume of output or turnover attained. This budget will, therefore, be useful only when the actual level of activity corresponds to the budgeted level of activity. 7  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. ‡ PRODUCTION BUDGET: Production budget involves planning the level of production which in turn involves the answer to the following questions: 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? ‡FLEXIBLE BUDGET: CIMA defines this budget as one ³ which, by recognizing the difference in behavior between fixed and variable costs in relation to fluctuations in output, turnover or other variable factors such as number of employees, is designed to change appropriately with such fluctuations´. ‡PERFORMANCE BUDGETING: These days budgets are established in such a way so that each item of expenditure is related to specific responsibility centre and is closely linked with the performance of that standard. ‡CAPITAL EXPENDITURE BUDGET: This is an important budget providing for acquisition of assetsnecessitated by the following factors: a. Replacement of existing assets. b. Purchase of additional assets to meet increased production c. Installation of improved type of machinery to reduce costs. ‡CASH BUDGET: This budget gives an estimate of the anticipated receipts and payments of cash during the budget period. Cash budget makes the provision for minimum cash balance to be maintained at all times. ‡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 ‡RESEARCH AND DEVELOPMENT BUDGET: This budget provides an estimate of expenditure to beincurred on R & D during the budget period. AR&D budget is prepared taking into consideration the research projects in hand and new R & D projects to be taken up. ‡ZERO BASE BUDGETING: The zero basebudgeting is not based on the incremental approach and previous figures are not adopted as the base. Zero is taken as the base and a budget is developed on the basis of likely activities for the future perio
