Setting and monitoring budgets

The budget process:

• Budgets can be drawn up for individuals, projects or departments 
• Main budget and forecasts focus on key areas such as sales and expenditure 
• 3 types; sales budget, expenditure budget, master budget

Sales budget:

• The key budget, as the amount a business sells determines the amount it needs to produce or supply
• Sales are the main area of generating cash inflows so it is a key indicator of how much a business will receive
• Difficult to forecast due to changes in trends

Expenditure budget:

• Once decided on how much it is likely to sell, a…