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Budgeting process

What is the purpose of budgets? What are some of the elements important to a solid budgeting process? Do all businesses need to operate on a budget ?

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By definition, a budget is a "quantitative plan for acquiring and using resources over a specified time period" (Brewer, Garrison & Noreen, 2007, p.286). A budget highlights the company's plan for the future. There are different types of budgets that can be made in a corporation. Listed below are the different types of budgets:

1. Direct labor budget
2. Direct material budget
3. Master budget
4. Merchandise purchase budgets
5. Manufacturing overhead budgets
6. Production budgets
7. Sale budgets and
8. Selling and administrative expenses budget
9. Self-imposed budgets

The purpose of the budgets is to "motivate people and to coordinate their efforts" (Brewer, Garrison & Noreen, 2007, p.289). It is also a means of gathering information for the company's ...