functional budgets. We determine the composition of functional budgets What is a functional budget
In a commercial organization like this: no sales - no profit. The process of developing functional (operational) budgets always begins with a sales budget, since without assessing and planning possible sales volumes of products, it is impossible to draw up a production budget, procurement and use budgets for raw materials and materials, labor costs, etc. At the same time, special attention should be paid to the limiting factors of the company's activity, such as, for example, the maximum market capacity, the availability of production facilities, the possibility of mobilizing financial resources, etc.
Sales budget
The starting point of any planning process in an organization is the forecasting of market capacity and product sales volumes. This data is the responsibility of the marketing manager. The role of the accountant-analyst is to coordinate the budgeting process and bring together data from different sources.
When developing a sales budget, the management of the organization should take into account all external constraints and forecast estimates related to the characteristics of this type of activity and the market situation (for example, the possible actions of competitors or the elasticity of prices for manufactured products), as well as an assessment of the general economic factors of the business, the effect of which relates to planned period (for example, the expected rate of inflation or a change in tax policy). Budgeters should also take into account qualitative factors, such as possible fluctuations in demand or the impact of anticipated changes in product specification or product mix. And only after a thorough assessment of all factors (external and internal) that may affect the volume of sales of products, you should start budgeting.
The sales budget looks like a document that shows sales volumes, prices and revenues for the entire range of products. Responsibility for its implementation lies with those responsible for the relevant function in the organization - the head of the sales department and the commercial director.
Sales budgets are developed, as a rule, in prices including VAT, since it is precisely such sales amounts that are indicated in contracts, invoices and other documents with which sales services work, it is in such amounts that funds come to the company's settlement accounts, and therefore control the performance of the sales service and its employees is more convenient for such “full” amounts. However, “with VAT” or “without VAT” is a question that is decided in each specific case by the organization itself, it is not regulated by anyone from the outside: as it is more convenient for control, the budgeting regulation is built.
Consider the process of developing budgets on the example of the company "Selena" (we referred to its activities in example 9.1).
Example 11.1
After researching the product sales market, the commercial service of the Selena company prepared a sales forecast (including VAT), on the basis of which the company's sales budget for September 20 ... was developed (Table 11.1).
Table 11.1
Sales budget
Only after the approval of the sales budget, you can begin to develop and detail the production budget.
- As well as in the following paragraphs, we give the most common job titles of employees responsible for the performance of certain functions in the organization. In the case of the implementation function, the positions can be called both the sales director and the head of the sales department. ^ In the same way that one can choose the approach in estimating material costs (see paragraph 9.3), the sales price in the preparation of sales budgets can also be used in the valuation with and without VAT. It only determines how the data is to be further processed. In our example, we will use prices that include CID.
Functional budget is formed on the basis of the operating budgets of the enterprise. The economic activity of an enterprise can be represented as a set of certain functions. In general, the set of these functions may look like this: sales, purchases, production, storage, transportation, administration (management), financial activities and investment activities.
aim drawing up functional budgets is to determine the need for resources for various areas of the enterprise. The functional budgets reflect the main decisions about the parameters with which the company's business processes should be implemented (production volumes, prices, purchase volumes, etc.).
Sales budget.
The sales budget contains information about a part of economic indicators that characterize the effectiveness of the sales business process. All information on this business process, as a rule, is reflected in two budgets: the sales budget and the commercial expenses budget. The sales budget reflects the expected volume of sales of products, sales prices and possible revenue from the sale of these products.
Business expenses budget.
It contains information about indicators that mainly characterize the effectiveness of the sales business process. Selling expenses reflected in this budget include all costs associated with the sale of products. This is a variable part of the wages of employees of the marketing department, transportation costs associated with the delivery of products to consumers, marketing and advertising costs, etc. The sales budget must ensure that the sales budget is met. These two budgets should be interconnected and any change in one of them should lead to an adjustment in the indicators in the other. The format of the business expenses budget includes the following indicators:
1) the total amount of selling expenses for the enterprise;
2) variable commercial expenses (change in proportion to the change in sales proceeds and the volume of products sold);
3) fixed selling expenses;
4) share of commercial expenses in sales proceeds;
5) the share of transportation costs in the proceeds from sales;
6) the share of expenses for the promotion of products in the proceeds;
7) the share of expenses for the maintenance and service of retail outlets in revenue;
8) profitability of commercial assets.
production budget.
All information about the efficiency of the production business process is reflected in two budgets: in the production budget and in the budget for production costs.
The production budget contains information on production volumes in physical terms in the context of the range of products manufactured by the enterprise, as well as information on the degree of use of the enterprise's production capacity. The production budget is the source document for the operational management of production processes. The production budget format includes the following indicators:
1) the volume of production by types of products;
2) the percentage of capacity utilization;
3) equipment utilization rate;
4) the level of work in progress;
5) the level of labor productivity.
It is necessary to pay attention to the fact that part of the indicators of this budget is calculated by product groups, and part of the indicators by production lines. At the same time, products of various product groups can be produced on the same line. Therefore, such an indicator as the percentage of capacity utilization does not duplicate the indicator of equipment utilization. The equipment utilization rate shows how efficiently the production lines are used in accordance with the production plan. And if the percentage of capacity utilization is less than the equipment utilization rate, then the company produces a wide range of products, but in small volumes. Cost indicators of the business process of production is reflected in the budget of production costs.
Manufacturing cost budget.
This budget reflects all indicators related to the costs of the enterprise for the release of the volume of products that was planned in the sales budget. At the same time, in addition to direct costs, indirect costs of the enterprise can be reflected in this budget. The format of the budget for production costs can contain the following indicators:
1) the total amount of production costs;
2) variable production costs;
3) fixed production costs;
4) the percentage of performance standards;
5) production cost for each type of product;
6) stocks of finished products;
7) profitability of production assets.
Purchase budget.
It contains information about economic indicators that characterize the supply business process. Depending on the complexity of the organization of this business process, the enterprise selects the structure of the procurement budget. If in a company almost all purchases are made in one structural unit, then one procurement budget is developed, if in several structural units, then a separate procurement budget is developed for each of them. As a rule, in large companies, a separate group of specialists is created to control the supply activities, who monitor market prices and control the purchasing activities of the enterprise.
Payroll budget.
It contains analytical information on departments related to labor costs and evaluation of the effectiveness of the motivation system operating in the company. The wage budget should provide all information on the company's wages, and should also reflect the system of restrictions on the maximum size of the permanent salary and the minimum size of the variable part of the salary. The salary budget format may include the following indicators:
1) the total wage fund;
2) the total variable wage fund;
3) the total permanent wage fund;
4) labor productivity;
5) staff turnover rate;
6) wage fund in the context of structural divisions;
7) wage fund in the context of the main business processes.
Administrative budget.
Administrative expenses are the most difficult expenses to directly relate to a business. It is believed that administrative expenses should not exceed 5% of the company's revenue. Otherwise, they will have a negative impact on the efficiency of the enterprise. As a rule, this budget includes the following indicators:
1) total administrative expenses;
2) the share of administrative expenses in the company's revenue;
3) administrative expenses in the context of the structural divisions of the enterprise.
Operating budgets
As already noted, an appropriate budget is prepared for each CFD. The number of operating budgets cannot be more or less than the number of responsibility centers.
The main task of drawing up operating budgets is planning and monitoring the results of the activities of the Central Federal District, i.e.
The operating budget fully describes the activities of the responsibility center and all its business operations in the language of finance.
The activities of the unit begin with planning the results of its activities with a description of the action program, therefore, the budgeting of the Central Federal District is carried out upon planning the activities of the responsibility center. Upon planning, the resources that will be consumed to achieve the planned result are calculated.
The operating budget is a tool for delegating financial authority to the head of the CFD. Naturally, the delegation of authority will be accompanied by responsibility for the results of the activities of the CFD, which will be expressed in the form of profit margins, marginal profit, income or costs (depending on the status of the responsibility center).
With correct and correct planning, for each responsibility center, articles and expenditure rates should be drawn up, which are calculated in the budget depending on the planned income of the CFD or the company. The financial service must monitor the compliance of the costs incurred by the FRC with both the approved budget and planned revenues.
In the event that the revenue side of the budget is not respected, its expenditure side should also be reviewed. Variable items of expenditure should be recalculated based on the results achieved. Fixed costs for the CFR should not be increased by reducing the absolute value of variable costs provided for in connection with a decrease in income. For example, let the CFD budget be approved at the level of 100,000 rubles. These data are calculated for the Central Federal District based on the sales volume of 200,000 units. Expenses of 100,000 rubles. for this CFD were calculated based on the variable component in the amount of 2% of sales and the constant component of 60,000 rubles. Sales were at the level of 150,000 units. Accordingly, the total costs of this CFD should have been 90,000 rubles. However, the head of the Central Federal District decided on the non-target distribution
The organization of budget management in the company in the Central Federal District 217 the circulation of funds and made an additional expense of 10,000 rubles. This example demonstrates the need to normalize not only the absolute value of expenditures, but also those items for which they were made. Therefore, for the purposes of control, a list of possible expenditure items for the Central Federal District and their amounts will be needed.
Functional budgets
Functional budgets are built on the basis of the functions of the company's activities - its business processes. A typical company performs the following functions:
procurement;
sales;
transportation;
management, etc.
Budget items, which are formed according to the relevant functions of the company, constitute the functional budgets of the company. The main purpose of functional budgets is to calculate the company's need for resources to carry out the relevant functions.
Companies need to establish the relationship between functional and operating budgets. For example, such a functional budget as the “purchase budget” is also the operating budget of the Central Federal District - the supply department. Each functional budget is compiled as a whole for the entire company, so the system of functional budgets forms its budget structure. The principle of forming functional budgets is to group them by type of activity (functions, processes) of the company.
As an example, we can highlight such company functions as sales, purchasing, warehousing and storage, advertising and marketing, transportation and management. Accordingly, the grouping of the specified functional budgets may look as shown in Fig. 3.3.
In this case, unlike the final budgets by cost elements, the budgets formed by the final cost elements (for example, labor costs, material costs, etc.) are not indicated. This is due to the fact that this presentation of budgets is formed by the types of activities of the company in the context of its commercial activities and management. In table. 3.5 is an example of a possible list of the company's functional budgets.
218 Chapter 3 Business Budget
Sales budget
Travel budget
Cost budget for warehousing and storage
Supply budget
Management budget
Rice. 3.3. An example of the composition of the company's functional budgets Table 3.5. Possible list of functional budgets 1.
Sales budget 1.1.
Goods sales budget 1.2.
Fixed assets sales budget 1.3.
Other implementation budget 2.
Procurement budget 2.1.
Procurement budget and direct costs attributable to cost 2.1.1.
Goods procurement budget 2.1.2.
The budget of transportation costs related to the cost 2.1.3.
Budget for customs clearance costs 2.2.
Procurement budget for the expenses of functional services in the Central Federal District 2.2.1.
Procurement budget for sales needs 2.2.2.
Procurement budget for warehousing needs 2.2.4.
Procurement budget for the needs of TPP 2.2.5.
Procurement budget for management needs 2.3.
Procurement budget for fixed assets and capital investments
Organization of budgetary management in the company according to the Central Federal District 219 3. Budget of commercial expenses 3.1.
Marketing expenses budget 3.1.1.
Sales budget (sales department 1) 3.1.2.
Sales budget (sales department 2) 3.2.
Transportation budget 3.3.
Storage budget 3.3.1.
The budget for the costs of acceptance, placement and packaging 3.3.2.
Budget for the costs of documenting 3.4.
Marketing department budget 3.5.
Supply budget 3.5.1.
The budget of expenses of the sector of foreign economic activity 3.5.2.
Expenditure budget for the customs clearance sector 3.5.3.
Cost budget for the certification sector 3.6.
Project budget 3.6.1.
Expenses budget for current projects 3.6.1.1.
Project costs 1 3.6.1.2.
Project costs 2 3.6.1.3.
Project costs 3 4.
Administrative expenses budget 4.1.
The budget of expenses for financial management 4.2.
IT Directorate's Expenses Budget 4.3.
Expenditure budget of AHO 4.4.
Expenses budget of the secretariat and office managers 4.5.
Legal service budget 4.6.
Personnel service budget 4.7.
Expenditure budget of the CEO 5.
Tax budget 5.1.
VAT budget 5.2.
Budget for payroll 5.3.
Budget fees in PF 5.4.
Tax budget for vehicle owners 5.5.
Income tax budget 5.6.
Land tax budget 6.
Personnel budget 7.
Budget for balances of goods and stocks at the beginning of period 8.
The budget of balances of goods and stocks at the end of the period 9. The budget of receivables at the beginning of the period 10.
Accounts receivable budget at the end of period 11.
Accounts payable budget at the beginning of period 12.
Accounts payable budget at the end of the period 13.
Investment activity budget 13.1.
Investment budget 13.1.1.
Investment project A 13.1.2.
Investment project B 14.
Financial activities budget 14.1.
Equity budget 14.2.
The budget for the payment of interest on attracted capital 15.
Cash flow budgets 15.1.
Income budget for core activities 15.2.
Income budget from clients 15.3.
Budget of payments for core activities 15.3.1.
Payment schedule for goods 15.3.2.
Schedule of payment of expenses relating to the cost of goods 15.3.3.
Payment schedule for business expenses 15.3.4.
Payment schedule for administrative expenses 15.3.5.
Schedule of tax payments 15.4.
Budget for other payments and receipts 15.5.
Income budget for financial activities 15.5.1.
Income budget for UV and other funds 15.5.2.
Budget of receipts of credits and loans 15.6.
Budget of payments for financial activities 15.6.1.
Credit and loan repayment budget 15.6.2.
Budget for payment of interest on credits and loans 15.6.3.
Dividend payment budget 15.7.
Income budget for investment activities 15.7.1.
Income budget in the form of payments for fixed assets 15.7.2.
Dividend income budget from participation in the share of other companies 15.8.
Budget of payments for investment activities 15.8.1.
Budget for payments for the acquisition of fixed assets and capital investments 15.8.2.
Budget for payments in the form of acquisition of a share in the financial unit of other companies 15.9.
Income budget for other activities 15.10.
Budget for payments for other activities
Organization of budget management in a company according to the CFR 221 Depending on the needs of the company, the budgets of the highest level (listed in the table) can be detailed to budgets of a lower level, and those (in turn) can also be detailed even deeper. For example, a material cost budget can be broken down into a fuel budget, a fuel consumption budget, and so on.
Depending on the needs of the company, the top-level budgets (listed in the table) can be drilled down to lower-level budgets, which (in turn) can also be drilled down further. For example, a material cost budget can be broken down into a fuel budget, a fuel consumption budget, and so on.
The relationship between functional and operating budgets is presented in Table. 3.6 - on the example of the sales budget. It shows the interconnection of budgets by income from sales. The interconnection between expenditure budgets and cost centers is built in a similar way.
Table 3.6. Interrelation of functional and operating budgets Functional budget of the company Name of the Center of income/costs BDR BDDS Balance Center of income "Wholesale sales, region 1" Sales revenues by region 1 Sales revenues by region 1 Assets
divisions by region 1 1 Sales, product A 2 Sales, product B 3 Sales, product C Functional sales budget for the company Revenue center "Wholesale sales, region 2"
4 Sales revenue by region 2
Sales, item A Sales, item B Sales, item C Sales proceeds by region 2 Assets
divisions by region 2
Functional budgets can be called the core of the entire enterprise planning system, because it is on their basis that the main budgets are compiled. Let's analyze the main groups of functional budgets.
Functional budgets can be roughly divided into three groups:
- operating rooms;
- financial;
- investment.
Operating budgets
Operating budgets describe the main activities of the company (budgets for sales, purchases, expenses, movement of fixed assets and intangible assets, taxes). Their composition is determined based on the specifics of the company's activities, its business processes, both basic and auxiliary.
Each process should be reflected in the corresponding functional budget or a separate item. The main business processes are what the company is directly involved in and what makes it profitable (in the case of a trade organization, purchasing, sales and marketing). Auxiliary functions include supporting functions (financial and economic management, personnel management, information technology services, office space maintenance).
Relationship between core and functional budgets
Financial budgets
IN financial budgets disclosed financial activities. They are formed in the event that it is supposed to attract borrowed funds or conduct transactions with short-term financial instruments in order to obtain additional income.
Investment budgets
Investment budgets(capital construction, long-term financial investments) are necessary for planning investment activities. For example, if a company intends to expand - the construction of new retail or production space, the development of a branch network, the purchase of shares or shares of other companies.
Example
Let's define a list of operating budgets for a metallurgical plant with a full production cycle. Its main business processes are ore mining, its enrichment, casting, rolling, sale of finished products and semi-finished products. Each of these processes must find its cost estimate in the budget.
The following operating budgets are introduced: the budget for ore mining, the budget for ore dressing, the budget for casting, the budget for rolling, and the budget for sales of finished products. These are not all operating budgets, because there are also auxiliary business processes. Among them are personnel management (hiring, training), administrative and economic management (maintenance of office premises, provision of stationery and office furniture), transport support, repair of machinery and equipment, dispatch control, IT support, logistics. Therefore, the group of operational plans will need to be supplemented with forms of budgets for labor costs, personnel management, administrative and maintenance costs, transportation costs, repair costs for machinery and equipment, an IT budget, and a procurement budget for other material and technical resources.
After the composition of functional budgets is determined, it is necessary to develop budget forms for them, determine the composition of indicators, the principle and procedure for their formation. You should immediately make sure that functional budgets are formed in a single format (type of budget table, units of measurement and other attributes).
