It has been noticed that a cost is related as closely as possible to its cause. The figures of costs are collected and analysed 'according to the nature and are allocated or apportioned on a basis of cause relationships.
This network technique is used for planning and controlling of different functional areas of management. The network analysis process consists of analysing the individual jobs or events (i.e. the components of the large project) and arranging them in a logical network.
They are statistical data, special reports and analysis, breakeven analysis, internal audit, standard costs, ratio-analysis etc.
To achieve the objective, it must be necessary for every activity on the network to be completed.
Budget provides only approximate estimates. Hence results cannot be measured accurately.
Performance Budgeting at the branch level should take the following factors into account in a careful manner:
Activities are divided into part known as "Decision Packages". Each decision package contains all the information about an activity including the purpose, cost, benefit and possible outcome if the activity is approved or disapproved.
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.
Budget aids planning this is not mere forecast but a forecast with numerical expressions.
Determine the period of time to be used as a basis for the production budget.