Published August 2011
Economic effectiveness of budget system
M.B.MamedovaBudgeting today is an indicator of quality of management in the company, conformity of management and applied administrative technologies to up-to-date requirements. Proceeding from company strategic targets, budgets solve problems of distribution of companys economic resources. The elements of the master budget address both operating and financial concerns. The operating budget is made up of the sales budget, production budget and expenses budget. As the name suggests the sales budget forecasts the sales for the company over the budgeted horizon. The sales budget is the most important element in the master as all other budget assumptions flow from the sales forecasts in the budget. The elements of the production budget for a manufacturing company is made up a budget for the cost of the raw materials that goes directly into the manufactured product, the cost of the labor used in the manufacturing process and the cost of the other inputs into the process such as heating, lighting, supervision and depreciation.
