TYPES OF BUDGET

TYPES OF BUDGET

Encyclopedia Americana (2001:69) by Grolier incorporation states that, in most cases the quantities in a budget are expressed in money. A labour budget for example may be presented in hours. Other budgets may be presented in unit material such as pounds or yards. But because money is the common denominator in an organization transaction. Encyclopedia Americana (2001:69) list out the following as the type of budgets:

1. OPERATING BUDGETS: It involves any item in the regular operations of the firm that is, them that normally and regularly appears on the income statement, such as sales expenses, or manufacturing cost. Operating budget usually extend not more than 12 months into the future.
2. PROGRAMMED BUDGETS: This in a way limited types of budget; they are limited to operating expenses that are subject to management’s discretion, such as research and development or advertising. When a programme budgets is used, the operating budget is limited to direct material, direct labour and manufacturing over-head items not easily affected by discretionary changes in policy by management.
3. CAPITAL BUDGETS: This includes all proposal outlays for capital items for a period. Outlays for land, plant and equipment, furniture and fixtures are included. Outlays for small tools, repair and maintenance are excluded.
4. VARIABLE BUDGETS: Is a budgets in effect of a development to fix various levels of activities. Comparisons are made between the actual cost and revenue and the budgeted figures for the same level of activity. Only changes in values and efficiency are involved because the actual volume and budgeted volume are the same.
5. VARIABLE OR STATIC BUDGETS: This type of budget is sometimes called forecast budgets which are developed for only level of activity. In the comparison of budgeted and actual results. Volume changes are present as well as volume and price changes, and so analysis under fixed budget are clear as under variable budgets.
6. LONG TERM BUDGET OR ANNUAL BUDGETS: Generally and as a matter of routine principle, the federal government of Nigeria budgets annually, that is the budgets is for one year. Some countries however, have adopted the policy of planned economy and to meet the needs of long term planning, the resorted to long term budgeting preparing the budget for three or more years.

Such budgets may, indeed be better described as long term planning rather than long term budgeting because what is provided for is financial planning over a period of years to finance the plan. The countries involved will spread the estimated plan expenditure over a number of years; the legislature will approve the plan along with its estimated expenditure.

1. CONTINUOUS OR ROLLING BUDGET: Are special types of short term budgets usually a year or fiscal year, they cover the current month and the following eleven months.
2. MASTER BUDGETS: It co-ordinates and summarizes all sub-budgets of a firm. Sub-budgets cover particular segments or activities of a firm.
3. APPROPRIATION BUDGETS: Usually show the maximum amounts that may be used for a particular project. In business, they are generally used to control capital expenditure.