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6 Different Types of Budgets are given below:
1. Materials and Utilities Budget:
This budget also known as operations budget includes budgeting for raw material required for production, spare parts for maintenance, labour time, machine time, energy consumption etc. The labour time and machine time is usually related to what a unit of time is budgeted to yield. It is the output per unit of time.
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2. Control of Liquidity:
This involves cash flow and is very important in controlling cash and meeting current financial obligations. This budget forecasts cash receipts and outlays on a set time basis and is necessary to control the income and expenses, so that
there is no shortage of cash to pay bills and also there is no excessive unused cash which may be unproductive.
3. Revenue and Expense Budgets:
The revenue budgets should show anticipated sales by product or by geographical territory or department etc. The expense budgets should cover all necessary and relevant areas such as rent, utilities, supplies, security etc.
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4. Capital Expenditure Budgets:
These budgets plan for long-term investments and include expenditure for new plant and equipment, major installations replacement of existing equipment, building etc. Capital budgeting is a part of long-range planning and must be broken into well defined phases of the programme, known as milestones, each phase being budgeted for cost, time and success in a self contained way.
5. Balance-sheet Budget:
It is a composite budget and reflects anticipated assets, liabilities and owner’s equity or net worth at the end of a given period in the future. It provides forecast of the anticipated financial status of the company at a future date.
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6. Flexible Budget:
Flexible or variable budget reflects and combats the changes in expenditure as a result of changes in volume of production and revenues. These expenditures are primarily variable costs since the fixed costs are not generally affected by changes in revenues. The basic idea of flexible budget is to establish a relationship of changes in variable cost as affected by changes in revenues due to changes in sales.