COSTS AND BUDGETS

COSTS AND BUDGETS

1. Budgeting Principles

   • Forecast, planning, Organization, Direction, Control

2. Classification

   • Depending on the flexibility
     • Rigid, static, fixed or assigned
     • Flexible or variables
   • According to the period of time they cover
     • short and long term
   • Depending on the field of applicability of the business
     • of operation or cheap
       • Budgets of
         • Sales, production, purchases, cost-production, cash flow cash master
     • financial
       • Treasury budget and of disbursements capitalized
   • Depending on the sector in which use
     • public and private

3. Definition

   • Consists in
     • -Setting goals general -Determination of objectives -Implementation of strategies
     • -Development of a plan short-term and long-term profits. -Implementation of a system of control.
   • Comprehensive system where goals are set and base objectives are determined for plan the activities to be carried out by the organization.

4. Advantages

   • Organization focused on Accomplishment of the goals
   • Real-time study of problems for taking decisions
   • Resource Optimization
   • Approach of New strategies

5. Limitations

   • They are estimated data and their effectiveness depends on the experience of the person who prepares them.
   • If they are wrong conceived can take to take wrong decisions.
   • Results at medium and long term.
   • Requires participation of the entire company

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