Budget Business Area Model

Budgeting is the central point for planning and control within an organization.

Budgeting not only establishes a framework for planning and estimating but provides an end-of-period set of measurement criteria to compare the effectiveness of the initial assumptions and planning process.

Budgets force management to set goals, objectives and financial limitations that affect the entire organization.

Budgets encourage the organization to establish standards and implement uniform procedures throughout the organization.

Budgeting is best implemented as a 'bottom-up' procedure in which department budgets are created and used to develop organization budgets that are based on realistic numbers determined by the lower level organizations that know the numbers best

The Budget Business Area Model consists of a variety of interrelated budgets and common supporting data:

>  Sales Budget
>  Production Budget
>  Materials Budget
>  Expense Budget
>  Operating Budget
>  Financial Budget
>  Manufacturing Budget
>  Cash Budget
>  Pro Forma Balance Sheet
>  Appropriations
>  Budget Compliance

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