Budgets help businesses track and manage their resources. Businesses use a variety of budgets to measure their spending and develop effective strategies for maximizing their assets and revenues. The following types of budgets are commonly used by businesses

  • Sales Budget – the expected product sales and the anticipated selling price per unit (during the budget period).
  • Production Budget – the required number of units that must be produced to meet the expected sales.
  • Direct Materials Budget – the materials required to meet production expectations.
  • Direct Labor Budget – the labor required to meet production expectations.
  • Manufacturing Overhead Budget – production facility expenses (during the budget period).
  • General and Administrative Budget – expenses required to run the corporate office (during the budget period).
  • Cash Budget – cash receipts and cash disbursements (during the budget period). Also determines the firm’s cash flows (during the budget period).