Professional Documents
Culture Documents
mm
On the basis of period or time, budgets may be classified into following three
categories:
p these budgets are in fact a kind of short-term budgets and
their period extends from one month to twelve months. The main objective of
these budgets is to make adjustments in short-term budgets according to
current conditions.
?n the basis f Fexibiity:
þ
. In brief, master budget depicts
the picture of total plans during the budget period and it covers
information relating to production, cost, sales, profit, etc.
-a) Mirect Materias Budget: this budget deals with the requirement and procurement of direct
materials: thus, it includes the following two important aspects:
Preparation of estimates of different types of raw materials needed for various products.
Scheduling of procuring necessary raw materials in required quantities at required time.
The price and quality of raw materials are also considered in materials budget.
-b) Mirect Labur Budget: this budget presents an estimate of the requirements of direct labour
essential to meet the production targets fixed in production budget. This budget may be classified
into labour requirement budget and labour recruitment budget. The labour requirement is estimated
on the basis of different grades and different departments and on that basis labour cost is also
estimated.
-c) Manufacturing verhead Budget: this budget gives an estimate of works or manufacturing
overhead expenses to be incurred in a budget period to achieve the production targets. The budget
may be classified into fixed cost, variable cost and semi-variable cost.
-d) ant Utiizatin Budget: this budget lays down the level of plant capacity to carry out the
production as per production budget. On this basis unutilized capacities in various departments and
their alternative uses can also be considered.
)( $cash budget is a statement which gives
an estimate of the anticipated receipts and payments
of cash during budget period. It also gives indication
for the arrangement of shortages and utilization of
surpluses.