Working with Budgets - Assignment Example

Operating with Budgets in an Organizations Operating with Budgets in an Organizations As an organization, a budget is considered a vital operational plan that will be used in running all the activities. A budget explains all the plans in an organization, the finances that have been set aside for these plans, and the avenues of financing the expenditure. There are several budgets and budgetary estimates that are notable in organizations. These include the master budget, cash budget, sales budget, production budget, labor budget, manufacturing overhead budget, operational and administration budget and lastly, the distribution budget (Kemp, 2003).

For an organization to perform to its best, it therefore must have well prepared budgets that will facilitate all the plans.The initial budget in an organization is the master budget, which encompasses all the other budgets. The master budget gives all the revenues and expenses that are expected for the period in time. This is followed by the revenue budget, which is considered to be the sales budget. The sales budget explains the forecasted sales and how they are to be achieved (Dugdale and Lyne, 2010).

The proceeds are therefore considered to be the revenue of the organization. Therefore, the sales budget is considered to be the primary budget, as it is an input to the organization.The organization has to succinctly prepare budgets that are directed towards the expenditure of the organization. An organization that does not have a plan for such budgets is likely to plunge into a negative accrual. The first budget in the expenditure side is the operational and administration budget. This is a budget that caters for the workers and personnel in the organization.

Since they are vital in the organization, they have to be prioritized (Drury, 2007). This is followed by manufacturing and overheads budget. This is a budget that denotes the materials that are to be used in the organization for production. The third budget is the labor budget, which is directed to the workers. Labor is a vital factor of production and should be given much consideration. The fourth budget is considered to be the production budget. This denotes the expenses that will be used during the production of the goods and services.

This is vital in that it initiates the final production of goods. The last budget is the supply and distribution budget. This is the final budget that shows the goods are ready for the market. The goods are therefore supplied in the market for sale, which is the initial forecast of an organization.ReferencesDrury C. (2007) Management and Cost Accounting. New York: Cengage Learning EMEA.Dugdale, D. and Lyne S. ( 2010) Budgeting Practice and Organizational Structure. New York: Elsevier.Kemp S. ( 2003) Budgeting for Managers.

New York: McGraw-Hill Professional.