The principle budget factor is the factor that limits

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The principle budget factor is the factor that limits the activities of functional budgets of the organization. In general sales volume is the principle budget factor. So the sales budget must be prepared first. Alternatively machine hours may be limited for the forthcoming period and therefore machine capacity is the limiting factor. Therefore company should prepare the production budget first. First need to identify the production capacity of the dept. Example: Sales, Production
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FORECASTING TECHNIQUES A vital function of managing any business is planning for the future. Experienced judgment, intuition and awareness of economic conditions may give business leaders a rough idea of what may happen in the future. This experience may be supported by various quantitative methods that can be used to forecast such outcome as next quarter sales volume. In addition degree of uncertainty needs to be incorporated in to the decision making process. What is Forecasting Forecasting is a tool used for predicting future demand based on past demand information.
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