Professional Documents
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CONDITIONS
CAPACITY
COVERAGE
LONG TERM
BASIC BUDGET
FIXED BUDGET
FUNCTIONAL BUDGET
SHORT TERM
CURRENT BUDGET
FLEXIBLE BUDGET
MASTER BUDGET
1. Budgets which are prepared for periods 1. Budgets which are prepared for periods
longer than a year are called Long Term less than a year are known as Short Term Budgets. Budgets.
2.Such Budgets are helpful in business 2.Such Budgets are prepared in cases forecasting and forward planning. where a specific action has to be
Examples: Capital Expenditure Budget and immediately taken to bring any variation R&D budget under control. Example: Cash Budget.
Basic Budget Current Budget A Budget, which remains unaltered over a long period of time, is called Basic Budget A Budget, which is established for use over a short period of time and is related to the current conditions, is called Current Budget.
FIXED BUDGET
IT IS A BUDGET DESIGNED TO REMAIN UNCHANGED IRRESPECTIVE OF THE LEVEL OF ACTIVITY ATTAINED
FLEXIBLE BUDGET
IT IS A BUDGET WHICH BY RECOGNIZING THE DIFFERENCE BETWEEN FIXED, VARIABLE AND SEMI VARIABLE COST IS DESIGNED TO CHANGE IN RELATIONSHIP TO LEVEL OF ACTIVITY ATTAINED
IT DOES NOT CHANGE WITH ACTUAL LEVEL OF ACTIVITY ACHIEVED. IT IS RIGID IN NATURE.
IT CAN BE RECASTED ON THE BASIS OF ACTUAL LEVEL OF ACTIVITY ACHIEVED. HENCE IT IS FLEXIBLE IN NATURE