The
policy of a business for a defined period is represented by the master budget,
the details of which are given in a number of individual budgets called
functional budgets.
These
functional budgets are broadly grouped as physical, cost and profit budgets.
Physical Budgets-
Those
budgets which contains information in terms of physical units about sales,
production etc. for example, quantity of sales, quantity of production,
inventories and manpower budgets are physical budgets.
Cost budgets-
Budgets
which provides cost information in respect of manufacturing, selling,
administration etc. for example, manufacturing cost, selling cost,
administration cost and research and development cost budgets are cost budgets.
Profit budgets -
Budgets
which enables in the ascertainment of profit, for example, sales budget, profit
and loss budget, etc.
