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The format of a budget varies depending on the company, but standard budgets include a written report detailing and justifying costs. A budget also includes a spreadsheet highlighting the quantitative aspects of the budget, primarily costs. Such expenditures include fixed and variable costs. Robert Carbaugh explains in the book "Contemporary Economics" how fixed costs pertain to up-front costs incurred regardless of quantity or volume produced. Examples include administrative salary, rent or venue fees and machinery. Variable costs, on the other hand, adjust based on output or usage; materials and inputs are types of variable costs. Computing the total value of these expenditures yields the overall program cost.
Features of a program budget include a written overview of how the costs are allocated, possible reasons for fluctuations in the expected costs and how to cover the expenditures. The report overview justifies each of the listed purchases and sometimes offers solutions to reduce the costs of the project. In some instances, a feature of a program budget is listing ways to cover the expenditures, including fundraising or diverting resources from one part of the organization to the project.
John Mutz, author of "Fundraising for Dummies," explains how program budgets should reflect how the business has planned
for the costs. The expected cost portion of the budget detailed in the spreadsheet outlines the items necessary for the program's implementation. The spreadsheet also indicates the total cost, which is usually cross-referenced throughout the report.
A program budget helps businesses understand and actualize costs. In some cases, calculating costs may illuminate that the company cannot afford the given program; if this occurs, the business saves valuable resources by not developing a program it cannot afford. Or, the budget illustrates ways the business can amend its original plans to something more cost-effective. Some businesses use a program budget as a proposal: In these cases, the business accepting bids from various companies can review the most effective and affordable choice offered by the vendors. A budget also engenders a sense of accountability to those in charge of making purchases for the project. Management can use the information outlined in the budget to create guidelines and expectations regarding cost.
Before listing costs, budget analysts should gather information from multiple sources regarding prices. The company should determine which item to purchase for the program only after consulting many prices. At this juncture, the company should commit to buying the product or using the service. Using mere estimates renders budgets unreliable and unsubstantiated.