As you can see, this is an expense report for the month of June with YTD data, which in this case is six months worth of expenditures. The cells with parentheses means you went over budget. Generally, an operating expense budget will have the current months and year-to-date (YTD) budgeted and actual expenses along with the variance. This example budget shows the different types of expenses, presented by finance, that have been determined by you and upper management along with the associated costs that your department has incurred. They have been given a monetary amount from upper management and should help you allocate to your needs. It is not their job to decide on what you need. Finance acts as a middleman between department heads and upper-management when it comes to budgets. Finances job is to make sure everyone submits their required operational expenses and then compiles those numbers for upper management in a way that makes sense. You should really look over the budget carefully with finance due to sometimes items might be in your bucket that you feel belong to another department. You would need to make sure that you have your staffing goals and needs figured out and stick to them as close as possible.
MASTER EQUIPMENT BUDGET WORKBOOK SOFTWARE
Lets look at a budget as if you are the “Customer Service Manager” in which you would mostly work with finance on budgetary items like staffing (payroll), training expenses, software licenses needed, and general expenses. Expense budget applies to all areas incurring operating expenses, including the sales department.Sales budget is associated with comparison and variance of the actual revenue brought with the projected revenue.There are two types of budgets within an operating budget, sales budgets and expense budgets: Operating budget, which is related to the normal day-to-day operations and expenditures such as payroll, supplies, and miscellaneous.This is equipment that generally lasts for more than a year such as a copy machine. Capital expenditure (also known as “Capex”) relates to costs associated with plant and equipment.There are basically two types of budgets, a capital expenditure budget and operating budget: On the other hand you might be able to increase your previously budgeted staff if sales are better than expected. You will during your managerial career have to deal with ways of cutting costs, including layoffs. You might also have an employee who quits and you cannot replace them, which is known as attrition. You might have the budget to hire someone, but it can be eliminated if sales do not improve, thus a hiring freeze. Also keep in mind, just because you created a budget for the year, it can change if sales are bad or below target. Great managers always look at significant expenses they can reduce or eliminate, such as overtime, travel and entertainment. By being on top of your budget, you might be able to make changes before it’s too late and you end up having to reduce staff or eliminate a branch of your department. You need to always look at ways to control those variances by controlling costs. Budgets are used to investigate variances, whether you went over or under budget, and address the reasons for the variances. You can’t just say at a whim you need 20 new people, just as upper management can’t say you have only $10 for a years worth of training classes. In most cases, part of your performance appraisal will be based on whether or not you were within budget for the year.īudgets need to be realistic. You might achieve your departmental goals, but if you go over budget in order to achieve those goals, you create financial problems for the company and jeopardize your own job performance review. Every manager needs to know what costs are associated with their department, and how in relation are they doing to that budget. It is the most basic financial planning and control tool. You as manager need to fully understand your role in the budgetary process. Setting up a Budget for your Department - Statement of Operations - Capex
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