The scope of the financial budget key

This Essay article Discussion of The scope of the financial budget key. It stands also called the general budget, which is the last link of the comprehensive budget system. And reflects the results of the daily business budget and the special budget in a comprehensive manner. Also, It includes only cash budgets and projected statements. You may also like to know the Analysis of Project Based Learning Benefits.

Here are the articles to explain, The scope of the financial budget key!

The preparation method and application of the financial budget key;

Fixed budget and flexible budget:

The fixed budget is based on the normal and objective level of a certain business volume as the sole basis to prepare the budget method. It is highly likely to be inconsistent with reality and is only applicable to enterprises or non-profit organizations with relatively stable business volumes.

The flexible budget is a budget method that can adapt to various situations based on the cost habit and the dependence on business volume, cost, and profit. Mainly used to prepare flexible cost (expense) budgets and flexible profit budgets. The main methods of compiling cost budgets include the formula method, tabulation method, and also graphic method. For the preparation of flexible profit budgets, the factor method is used for enterprises operating in a single variety or for multi-variety operating enterprises that use the division method to deal with fixed costs, and the percentage method is used for enterprises operating in multiple varieties.

Incremental budget and zero-based budget:

An incremental budget is a method of appropriately adjusting the original cost items according to the actual situation of the budget based on the cost and expense level of the base period. While simple and easy to implement, it may keep unreasonable spending items in the budget.

Zero-based budgeting, regardless of the base period, takes zero as the starting point for all budgetary expenditures, considers the content of each cost and whether the expenditure standards are reasonable one by one, weighs the priorities, and guarantees unavoidable and non-delayable projects, based on a comprehensive balance Methods of preparing a budget. Also, It is more reasonable and can reduce costs. But the workload is large and the focus is not easy to highlight. It is suitable for the preparation of cost budgets for service departments that are more difficult to identify.

Regular and rolling budgets:

Regular budgets stand prepared with a constant period as the budget period. Although it is convenient to compare between actual and budget, and analysis and evaluation. Also, the budget stands generally prepared in the first two or three months of the year. It is not clear about the situation of the plan period, and it is easy for managers to only consider the completion of the current plan during the implementation, and lack long-term plans.

Rolling budget, which separates the budget period from the fiscal year, analyzes the difference between the implementation of the current budget and the actual situation, revises it in time, and continuously extends and supplements the budget. It is a continuous and also stable "special regular" budget method. In specific operations. It can roll on a monthly, quarterly or mixed basis. The mixed rolling has the characteristics of having a greater grasp of short-term forecasts. And a small grasp of long-term forecasts according to people's understanding of the future. Which can not only achieve long-term plans and short-term arrangements. The distance is slightly closer, and the budget workload can reduce.

Financial Budgeting Basis

The business budget and special decision-making budget are the data sources of the financial budget. And they form a complete system and also restrict each other. The specific preparation should start from the data flow relationship between budgets. And also the data relationship within each budget.

The sales budget

The data relationships in the sales budget are:

1. Sales revenue of a certain product = sales quantity of this product × unit price;
2. Total sales revenue of the enterprise = sum of sales revenue of each product;
3. Sales cash income = (total sales revenue - current credit sales) + recovery Accounts receivable in the previous period;
4. Sales tax expenditure = total sales revenue of the enterprise × relevant tax rate.

The production budget is a budget prepared separately by product name and quantity. During the budget period, in addition to having enough products for sale. Furthermore, The inventory level at the beginning and end of the period should also consider.

1. Estimated production volume of a certain product = Estimated sales volume + ending product inventory - beginning product inventory;
2. Ending inventory of the previous period = inventory at the beginning of the current period.

The direct material budget

The data relationships in the direct material budget are:

1. The amount of a certain material consumed by a product = the production volume of the product × the material consumption quota of the product;
2. The consumption of a certain material = the sum of the material consumed by each product;
3. The purchase amount of a certain material = Consumption of the material + material inventory at the end of the period - material inventory at the beginning of the period;
4. Ending inventory of the previous period = inventory at the beginning of the current period;
5. The purchase cost of a certain material = purchase amount of this material × unit price;
6. Also, The total purchase cost of materials = the sum of purchase costs of each material;
7. Cash expenditures for direct materials = (total material purchase cost - material purchase amount on credit) + repayment of previous material purchases on credit.

The direct labor budget

The data relationship in the direct labor budget is as follows:

1. The total man-hours consumed by a certain workshop to produce a certain product = the output of the product produced by the workshop × the labor unit consumption quota of the product in the workshop;
2. The total man-hours consumed by a certain product = the product in each workshop The sum of the total working hours consumed;
3. Also, The salary budget of a product = the total working hours consumed by the product × the wage rate per working hour;
4. Other direct labor expenses = salary budget amount × accrual percentage.

The product production cost budget is a synthesis of the three budgets of materials, labor, and expenses. And the total production cost and unit production cost of each product during the budget period can be obtained.

The specific preparation of the financial budget

The relevant data of daily business budget and special decision-making budget flow into the cash budget, and form a certain data relationship:

1. Cash balance at the beginning of the period + operating cash income - operating cash expenditure - capital cash expenditure = cash balance;
2. Also, Cash Surplus + fundraising - use of funds = cash balance at the end of the period;
3. Noncash balance in the previous period = cash balance at the beginning of the current period. The principles for preparing forecast statements are the same as those for accounting.