Finance illustration Finance theory

Budgeting

A budget is a plan, which is set out in numbers. It sets out figures that an organisation like a company hopes to achieve in the future. For example, a company like Kraft will create budgets for:

Budgeted sales

Budgeted production figures

Budgeted costs, etc.

Here is a sales, costs and profits budget for the supply of chocolate eggs in the six months leading up to Easter:


Note that the actual figures achieved by the company may be different from the budgeted ones. For example sales figures may be £20,000 because demand is less than expected. However, costs may be the same because the firm may have already produced £12,500 worth of eggs to sell. If that were the case then actual profit would only be £7,500, which would be really short of the budgeted figures.

A budget is a plan for the future set out in numbers dealing with quantities such as sales, costs and production.


Supporting Documents

These downloads will help to put finance theory into context using real world examples from real businesses.

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Discover how Ben Sherman employed finance theory to succeed in the fashion industry by downloading our premium case study.