TYPES OF BUDGET AND OTHER BUDGETING CONCEPTS

1. The Master budget and its different components .

2. Continuous ( Rolling Budget )- a budget that is revised on a regula(ontinuous )r basis. For
example , a budget for 12 months is extended for another month in accordance with current
data as the current month end .
3. Fixed budget - a budget based on only one level of activity ( sales or production volume ) .
4. Flexible budget – a series of budgets prepared for many levels of activity . It makes possible the
adjustment of the budget to the actual level of activity before comparing the budget figures
with the actual results .
5. Incremental budgeting – a budgeting process wherein the current period’s budget is simply
adjusted to allow for changes planned for the coming period .
6. Zero-based budgeting – a budget is prepared every period from a base of zero . All expenditures
must be justified regardless of variances from previous periods .
7. Life -cycle budget - a product’s revenues and expenses are estimated over its entire life cycle (
target costing and target pricing . It accounts for , and emphasizes the relationships among
the costs at all stages of the value chain , such as research and development, design ,
production, marketing , distribution , and customer service .
8. Activity –based budgeting – unlike in the traditional emphasis on functions or spending
categories , activity- based budgeting applies the ABC principles and procedures to budgeting
a. The activities are identified , a cost pool is established for each activity , a cost driver is
identified for each pool , and the budgeted cost for each pool is determined by
multiplying the budgeted demand for the activity by the estimated cost per unit of
such activity .
9. Kaizen Budgeting - Kaizen is a Japanese term that means continuous improvement . Thus ,
Kaizen budgeting assumes the continuous improvement of products and processes ; the
effects of improvement and the costs of their implementation are estimated .
a. Kaizen budgeting is based not on the existing system but on changes that are to be
made .
10. Governmental Budget -unlike in a private-sector budget, a governmental budget is not only a
financial plan and a basis for performance evaluation but also an expression of public policy
and a form of control having the force of law .

Budget Manual – describes how a budget is to be prepared . It usually includes

1. Budget planning calendar – the schedule of activities for the development and adoption of the
budget . It includes a list of dates indicating when specific information is to be provided by / to
those who are involved in the budgeting process .
2. Distribution instructions for all budget schedules so that those segments involved in the
budget preparation would know to whom / from whom a computed budget schedule is to be
given/acquired .
Budget Report -shows a comparison of the actual and budget performance . The budget variances ,
which are properly described as either favorable or unfavorable , are also shown on the report .