Budget Preparation and Implementation.pptx

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1. SRI RAMACHANDRA FACULTY OF PHARMACY B .PHARMACY VI I SEMESTER Course: Pharmacy Practice Lecture – BUDGET PREPARATION AND IMPLEMENTATION Number of students enrolled: 102 Venue: Lecture H all II , II nd Floor Dr. G.Swathy , M.Pharm, Ph.D A ssistant Professor Sri Ramachandra Faculty of Pharmacy SRIHER ( DU )

2. INTRODUCTION Budget is a plan of activities to be carried out in future for specific period in financial term. Budget is used to project future income and expenses. Objectives of Budget: S et benchmark for controlling ongoing operations E fficiency and improvement in the working of the organizatio n reducing wastage and losses by revealing them in time for future corrective actions.

3. Advantages of Planning a Budget/Benefits of Budget: All levels of management plan ahead. Definite objectives for evaluating performance. Early warning system for potential problems. Coordination of activities within the business. Management awareness of the entity’s overall operations. Motivates personnel throughout organization to meet planned objectives.

4. CLASSIFICATION/TYPES OF BUDGET

5. BUDGET PREPARATION P repared as per the requirement or types of organization. Based on the requirement, the budget may be prepared considering the length of period of its implementation. Long-term Budget: P epared for the period of 5 to 10 years. P repared depending upon of the size of organization. Short-term Budget: P repared for duration of 2 to 5 years. P repared under control conditions. Current Budget: P repared for shorter duration. D Duration is usually 1 to 3 months

6. Development of Budget Revenue Accounts: Total income must be calculated . Pharmacy department or accounts department maintains daily, weekly, monthly and annual cost of the pharmaceuticals issued to the patient services. N umber of prescriptions, number of prescriptions dispensed by each pharmacist, hours of work put in prescription volume per hour of service, medication cost per patient day, average drug cost per clinic visit, average salary cost per prescription and average supply cost per requisition. Expense/Expenditure Accounts: A dministrative and general expenses. Professional care of the patients, out-patients and emergency expenses and miscellaneous expenses - salaries and wages , supplies and materials ( requirement of amount in rupees for supplies and materials with the help of the latest financial budget ) If the budgeted figure and the previous figure was the same then the previously prepared budget was well prepared. Purchase expense includes the cost of prescriptions purchased from an outside pharmacy. Capital Equipment Requests: Equipment and construction budget - new model equipment , remodeling and replacement of equipment , future expansion.

7. ORGANIZATION FOR BUDGETARY CONTROL C rucial function and requires an effective planning. S everal departments for effective functioning of system B udgetary control flow is through defined channels. departments heads like - sales manager, production manager, finance manager and personal manager. R eport to vice president of respective departments followed by president. Organizations have budget centers, budget committee, budget officer and chief executive officer.

8. Budgeting Control B ring ing efficiency in working of any business budgetary control - success Budgetary control involves three steps: Preparation of budgets. Comparisons of actual results with planned one. Revision of plan or budgets in the light of changed circumstances. Essentials of Effective Budgeting: Sound Organizational Structure: Authority and responsibility for all phases of operations are clearly defined. Based on Research and Analysis: Realistic goals that will contribute to the growth and profitability of the company. Top Management: Directly related acceptance by all levels of management.

9. IMPLEMENTATION OF A BUDGET R equirement of different parameters: Actual Fund Position: Successful implementation - financial position of a firm. Master budget will give insight about the future plan. Cash budget will help to know the cash plan for specific period. Overall, all types of budget are studied at micro level to implement the planned budget. Utility of Particular Item: M aterials used and expressed in quantities whereas the materials purchases budget is expressed in both ways that is quantitative and financial. This helps in scheduling the purchase of materials to produce a given volume of output during particular period. Cost of Products: Study of cost required to manufacture/purchase a particular product is very important of budget planning. Cost includes direct costs and indirect costs. Basically, it is production and non-production costs required to manufacture a particular product. Quantity of products: Effective inventory management is needed for successful implementation of budget plan. To avoid stock out and over stock, effective inventory control is needed, as huge amount of capital is invested in inventory.

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