Budget, Budgeting and Budgetary Control
A budget is a blue print of a plan expressed in quantitative terms. Budgeting is a technique for formulating budgets. Budgetary Control refers to the principles, procedures and practices of achieving given objectives through budgets.
According to Rowland and William, ‘Budgets are the individual objectives of a department, whereas Budgeting may be the act of building budgets. Budgetary control embraces all and in addition includes the science of planning the budgets to effect an overall management tool for the business planning and control’.
Types of Budgeting

Budget can be classified into three categories from different points of view. They are:
1.                  According to Function
2.                  According to Flexibility
3.                  According to Time

I. According to Function
(a) Sales Budget
The budget which estimates total sales in terms of items, quantity, value, periods, areas, etc is called Sales Budget.
(b) Production Budget
It estimates quantity of production in terms of items, periods, areas, etc. It is prepared on the basis of Sales Budget.
(c) Cost of Production Budget
This budget forecasts the cost of production. Separate budgets may also be prepared for each element of costs such as direct materials budgets, direct labour budget, factory materials budgets, office overheads budget, selling and distribution overheads budget, etc.
(d) Purchase Budget
This budget forecasts the quantity and value of purchase required for production. It gives quantity wise, money wise and period wise particulars about the materials to be purchased.
(e) Personnel Budget
The budget that anticipates the quantity of personnel required during a period for production activity is known as Personnel Budget.
Notes
(f) Research Budget
This budget relates to the research work to be done for improvement in quality of the products or research for new products.
(g) Capital Expenditure Budget
This budget provides a guidance regarding the amount of capital that may be required for procurement of capital assets during the budget period.
(h) Cash Budget
This budget is a forecast of the cash position by time period for a specific duration of time. It states the estimated amount of cash receipts and estimation of cash payments and the likely balance of cash in hand at the end of different periods.
(i) Master Budget
It is a summary budget incorporating all functional budgets in a capsule form. It interprets different functional budgets and covers within its range the preparation of projected income statement and projected balance sheet.
II. According to Flexibility
On the basis of flexibility, budgets can be divided into two categories. They are:

1. Fixed Budget
Fixed Budget is one which is prepared on the basis of a standard or a fixed level of activity. It does not change with the change in the level of activity.

III. According to Time
On the basis of time, the budget can be classified as follows:
1. Long-Term Budget
A budget prepared for considerably long period of time, viz., 5 to 10 years is called Long-term Budget. It is concerned with the planning of operations of the firm. It is generally prepared in terms of physical quantities.
2. Short-Term Budget
A budget prepared generally for a period not exceeding 5 years is called Short-term Budget. It is generally prepared in terms of physical quantities and in monetary units.
3. Current Budget
It is a budget for a very short period, say, a month or a quarter. It is adjusted to current conditions. Therefore, it is called current budget.
4. Rolling Budget
             It is also known as Progressive Budget. Under this method, a budget for a year in advance is prepared. A new budget is prepared after the end of each month/quarter for a full year ahead. The figures for the month/quarter which has rolled down are dropped and the figures for the next month/quarter are added. This practice continues whenever a month/quarter ends and a new month/quarter begins.