Prepare A Budget Breakdown

Prepare a budget breakdown for a business unit with reference to planned activities and estimated costs.

There are various ways of compiling a Budget Breakdown. One way of completing this exercise is to use a spreadsheet to list items that are to be included in the budget. This is known as a Budget Form.

A budget form is the standardised actual layout that is used to collect and display all the information that goes into the budget. While most companies should insist on standard forms, some do allow a degree of flexibility appropriate to the specific individual circumstances. Keep the following five principles in mind to make sure that the form looks good and is easy to read and understand. Keep the form simple and straightforward, with only the necessary details.

• All forms should be consistent, with a similar layout, typeface and design.
• The form should be logically presented, well-organised and be understandable without instructions.
• Wherever possible, use spreadsheets or tables to ensure easy capture of information and ease of subsequent processing.

When filling in the form, ensure you have inserted figures accurately and that they have been added or subtracted correctly. Check that the information is correctly arranged in columns and rows and that decimal points and commas are in the right places. Try to make the form as intelligible as possible. Correct all grammar, spelling and punctuation and avoid using any jargon, slang, technical or vague language. Keep the words and phrases short.

Once you have completed the form, give it to someone else, such as a manager to check that they can understand what you have written.

Remember that time spent on a well-created form is never wasted. Not only will it portray a well-presented and professional image, but it can also be understood easily by others and importantly, can be easily referred to during later budget discussions.

A departmental budget will only require the expected expenses and revenue of that department. This budget will then be consolidated into the master budget.

Let’s now look at an example of a Budget Form:

In this example, you will notice that the figures every month for each line remain unchanged until November and December. This assumes that during these two months, bonuses will be paid, for example, to the staff. Training costs will come down due to people going on holiday during this period, but travelling expenses will increase due to extra travel required to customers – to complete their requirements for the year.

The amounts shown for each commodity or expense is the maximum amount allocated to the department for expenditure. Careful monitoring of spending within the department should be done to make sure that the department stays within the budget.