Budget Committee- The responsibility fo the preparation of budgets generally rests with the budget committee which generally includes the following executives:-
i) Chief Executive who will be the chairman of the committee.
ii) Production Manager
iii) Sales Manager
iv) Materials manager
v) Standard & Quality Control Manager
vi) Finance Manager
vii) Other Departmental Head.
Functions of Budget Committee-
The main functions are as follows-
i) Assisting the manager in making budget by giving them information about past performances,
ii) Circulating the broad outline of the policies framed by the top management which should be taken under consideration while preparing the budgets.
iii) Reviewing the budget estimate prepared by the various departments and suggesting modifications if necessary.
iv) Preparing the master budget after the functional budgets are prepared.
v) Comparing the reports of actual performances with budget policies and procedure.
vi) Assisting the preparation of budget manual.
Budget Manual- It is a document that contains the guidelines for the preparation of various budgets and sets out the responsibilities of the persons engaged in the routine of and the forms and records required for budgetary control. All departments refer this manual for clarification regarding procedural details and formats to be used at every stage from preparation of budgets till reporting of actual and deviations from budgets.
Budget Variance- A budget variance represents the difference between plan and achievements expressed in monetary terms, that is the difference between budget figure and actual figure. Variance analysis is the process of ascertaining variances from budget and finding reasons for variances. Variance is unfavorable if actual is more than budget. The same is favorable if actual is less than budget. Variance report is prepared showing budget and variances and sent to persons responsible for each functional budgets for comments and action. When standard costing is employed along with a system of flexible budgeting variance analysis is greatly facilitated.