Budgets and Budgeting

• What is a budget?


  A financial plan for the future concerning the revenues and costs of a business
• Zero budgeting


  Budget is based on new proposals for sales and costs – i.e. built from the bottom-up
• Historical budgeting


  Use last year’s figures as the basis for the budget and is based on actual results
• Revenue ( income) budget


  Expected revenues & sales
• Cost (expenditure) budget

  • Expected costs based on sales budget
  • Overheads and other fixed costs
• Profit budget


  Based on the combined sales and cost budgets
• Variance Analysis


  Calculating and investigating the differences between actual results and the budget