A budget is a quantified financial plan for a forthcoming accounting period or a defined period of time. With a budget, companies can track a process or improve performance by forecasting revenues and expenditures.
A budget may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities, and cash flows. There are several different types of budgets, depending on their purpose, and they fit together in a cascade. The sales budget and the purchase budget are most commonly used by a retailer or a wholesaler that do not manufacture their own goods.
Different types of budgets
Retail Sales Budgets. This budget shows the expected number of sales units of a period and the expected price per unit. It also shows total sales, which are simply the product of expected sales units and expected price per unit. A company must know how many products it will sell and how much revenue will be generated before it can determine purchasing budgets.
Retail Purchase Budgets. This budget is an estimation of the organization's requirements for materials purchases and inventory it plans to grow or hold over a given period of time. The amount stated in the budget is the amount needed to ensure that there is sufficient inventory on hand to meet customer orders for products.
The value for a Retail Sales Budget and a Retail Purchase budget can be made by:
- Division
- Item Category
- Product Group
- Item
- Item Hierarchy
and can be viewed by:
- Day
- Week
- Month
- Quarter
- Year
- Accounting Period
and can be viewed as:
- Net Change
- Balance at Date
and can be entered in hierarchies or in detail per store.
See also