Budget_Analysis_Project_FNC111-FA17.docx - Fall 2017...

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Fall 2017 College of Staten Island – School of Business FNC 111 – Personal Finance Budget Guide: Keeping Track of the Money Preparing a Department Operating Budget College of Staten Island, School of Business Overview of the Operating Department Budget Although you are most likely not an accountant, as a supervisor, it is likely that you’ll be expected to prepare a budget for your department; and it is important that you understand the process. A budget is an internal document that is an essential ingredient of the business’ planning process and it is safe to say that successful companies take budget preparation seriously. Supervisors are responsible for the activities of their departments Although there are many different kinds of budgets, one type of budget that you will commonly encounter as a supervisor is called a “department operating budget.” It is a plan that shows each and every expenditure that your department will make to carry out its operations. Also known as a “cost centered” budget, this type of budget is used by departments that do not directly generate revenue for the company. Examples of this are: an accounting department, a human resources department, a technical-computer support department. Although these kinds of departments are essential to a company, they do not sell a product or service that generates dollars from others outside the company---their main role is to help support their company’s operations. The Role of the Supervisor A typical budget may contain information for a single year and may be updated regularly such as every month, three, or six months depending upon how closely the management of the company plans to monitor the spending. There are various methods for preparing a budget. One kind of budget will allocate a supervisor a certain amount of money in order to run his/her department. The allocation decision may be communicated by the accounting department or by senior management directly. It is the role of the supervisor to plan expenditures to stay within the budgeted goal. This kind of operating budget is called “Top Down” budgeting. Another kind budgeting is called “Bottom-up” budgeting whereby each department submits a budget to management, who will review, revise, and approve it. Sometimes companies use a combination of the two. Therefore creating a budget might not be that different from running your own household. You know how much money is in the “pot” and you need to make decisions on what and how each dollar gets spent on. Regardless of the type, most budget processes will require the supervisor to justify the spending of each and every penny. Budget Categories Budgets can take a variety of formats but generally include categories to measure: Budget Allowance – money given to a department for each type of spending Actual spending- expenditures that occurred Projected spending- expenditures that will occur at some future date 1
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Fall 2017 Percent changes in budget amounts Assumptions
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  • Spring '17
  • vega
  • supervisor, 2010s

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