Preparing a Budget Plan in Organization and management.pptx

Organization and management

1. Preparing a Budget Plan

2. In our personal pursuit, a budget is a vital part of our life.

3. Having a budget allows you to see how much money you earn and spend over a period of time.

4. Budget helps you to make good choices for spending your money on what you need or want now and saving your money for what you think you’ll need or want in the future.

5. Prepare a budget plan (ABM_AOM11-IIf-h-38).

6. Understand the importance of budgeting. Know the process of budgeting. Develop a budget plan.

7. Understand the importance of budgeting. Know the process of budgeting. Develop a budget plan. Objectives

8. For students, their allowance is the amount of money used for their your daily expenses. In this activity, think about your allowance and the ways on how you allocate it for different purposes. It’s not about the Money

9. How much is your daily allowance? Do you receive it daily, weekly, or monthly?

10. How do you allocate your daily allowance? Describe the breakdown of your allowance in percentage.

11. As a student, what is the importance of proper allocation of your daily allowance?

12. What is the role of budget in planning and controlling?

13. Budget Definition A budget is a type of plan expressed in a quantitative manner set by the management for a specific period of time. It shows the organization’s projected income and expenditures for the year.

14. Role of Budgeting in a Business Enterprise

15. Budget Budget as a Planning Tool Budgeting is a planning tool that translates all the plans of the company in quantitative terms. The goals and objectives are expressed in financial terms, such as targeted sales and corresponding sales volume.

16. Nickson wants to establish a new branch of his internet rental service business. He realized the demand for internet rental services grew significantly, so he needed to have an additional branch to cater to his other customers. Budget as a Planning Tool

17. Budget Budget as a Controlling Tool A budget is also considered a controlling tool because it helps keep track of costs and expenses and identify whether they are above or within the organization's set limits.

18. Budget Budget as a Controlling Tool Budgeting involves an analysis of budget and cost to determine budget variances , the difference between the planned budget and the actual expenses incurred or amount spent after an activity or a project.

19. Budget Budget as a Controlling Tool A positive variance means the budgeted amount is larger than the actual amount spent. A negative variance happens when actual costs or expenses are more than the planned budget.

20. Budget Comparison of planned budget and actual cost

21. What is the importance of budget in a business enterprise?

22. Approaches to Budgeting Incremental Budgeting This approach uses actual figures from the previous year and adds or subtracts a percentage to obtain its current year's budget.

23. Approaches to Budgeting Zero-Based Budgeting This approach refers to making a budget from scratch. Managers must be able to explain and justify every single expense under their departments. No expenditures are automatically approved.

24. Approaches to Budgeting Activity -Based Budgeting It is a top-down budgeting approach (the top and senior management prepare a high-level budget for the company) that determines the amount of inputs required to support the company's targets or outputs.

25. Approaches to Budgeting Value Proposition Budgeting This approach makes sure that all activities and expenditures included in the company's budget provide value to the company, employees, customers, and other stakeholders. It aims to avoid and remove unnecessary and non-essential expenditures.

26. Types of Budget Sales Budget A sales budget determines how the resources should be allocated to achieve forecasted sales.

27. Types of Budget Production Budget The production budge t is commonly expressed in physical units or quantity. It determines the number of units or outputs aimed to be produced to meet the customers' demands based on the sales forecast and sales budget.

28. Types of Budget Cost Budget A cost budget forecasts the future expenditures that the company is expected to incur in the future based on projected revenues and sales.

29. Types of Budget Cash Budget A cash budget is a budget of expected cash receipts (inflow) and disbursements (outflow) during a specific period.

30. Types of Budget Master Budget A master budget consolidates all of the smaller budgets within your organization and turns them into one overall budget. It is known as the “budget of budgets.”

31. Types of Budget Fixed Budget A fixed budget is a type of budget that does not change regardless of the increase or decrease in volume of products produced or level of income.

32. Types of Budget Flexible Budget A flexible budget is a type of budget that adjusts to changes in actual income or production levels.

33. Steps in Preparing a Budget Plan

34. Steps in Preparing a Budget Plan Identify your revenue sources. During the drafting of a budget, income should be computed prior to deducting expenses.

35. Steps in Preparing a Budget Plan Determine your fixed costs. After determining your income sources, you have to know your fixed costs. Fixed costs are the expenses that stay the same from month to month or year to year. Examples are rent, internet, telephone, payroll costs, insurance, and property taxes

36. Steps in Preparing a Budget Plan Determine variable costs. Variable expenses are expected to change daily, monthly, weekly or yearly. Variable costs can include sales commissions, costs of raw materials used in production, delivery or shipping costs, electricity, etc.

37. Steps in Preparing a Budget Plan Set aside a contingency fund. Contingency fund is the amount of money set aside to cover possible unforeseen future expenses. Contingency fund aims to secure a company's financial stability by having a reserved fund that the organization can use to fill emergency needs.

38. Steps in Preparing a Budget Plan Review, revise, and assemble the final budget. Compare the amount of money from your income sources and the expected expenses of the business. A sk significant stakeholders to take a look at your budget plan, and revise it if needed. Distribute your budget plan to the stakeholders concerned.

39. Why should revenues be considered first in making the budget plan?

40. A budget is a plan expressed quantitatively. It is prepared by the management and pertains to a specific period of time. It presents the organization’s income and expenditure for the year ahead. As a planning tool , the budget translates organizational plans into numerical figures. It sets how many resources are required to accomplish an organization’s goals. As a controlling tool , it helps keep track of costs and expenses and identify whether they are above or within the organization's set limits.

41. Different types of budgets exist based on what they quantify or how they are formulated. These include: Sales budget; Production budget; Cost budget; Cash budget; Master budget; Fixed budget; and Flexible budget.

42. Developing a budget is a sequential process that follows these steps: Identify revenue sources. Determine fixed costs. Determine variable costs. Set aside a contingency fund. Review, revise, and assemble the final budget.

43. True or False. Write true if the statement is correct. Otherwise, write false. Budgeting is an important factor in the success of a business enterprise.

44. True or False. Write true if the statement is correct. Otherwise, write false. There are four steps involved in developing a budget plan.

45. True or False. Write true if the statement is correct. Otherwise, write false. A budget is a useful tool that can be used in the planning and controlling functionS of a business enterprise.

46. True or False. Write true if the statement is correct. Otherwise, write false. A master budget is known as the “budget of budgets.”

47. True or False. Write true if the statement is correct. Otherwise, write false. Budgets are monetary allotment for a certain project.

48. What are the potential consequences if an organization does not have a budget?