Comparison of Budget and Actual Company Performance

By comparing what is contained in the budget to what is achieved by realization of the company's work, it can be judged whether the company has been successful or less successful. From this comparison can also know the causes of deviations the budget with the realization, so that it can also know the weaknesses and forces that are owned company. It can be used as an ingredient consideration is very useful to develop plans (budget) as well as further more mature and more accurate.

Budget Main Uses

Budget has three main uses, namely:
1. working as a guide
budget serves as a working guideline and provide direction and simultaneously provide targets to be achieved by the activities of the company at a time when that will come.
2. as a means of coordinating the work
budget serves as a means of coordinating the work so that all the parts that are in the company can support each other, work together well, to go targets have been set. Thus the smooth running of the company will be more guaranteed.
3. working as a surveillance tool
budget also serves as a benchmark, as a comparative tool to assess (evaluate) realization of the company's activities later.

The state of the Economy Affects Life Company

General economic circumstances, both national and international influence the life of a company. Therefore companies are living in an economy that steady, his position will be more stable as well, making it possible to develop a budget that long-term. Company while living in a less stable economy also, making it less possible to structure a long-term budget.

Data and Information Affect Budget Selected

For companies have long standing, so as to have enough data, information and experience, have the possibility of preparing a long-term budget. conversely, for companies that have not been long standing, so do not have enough data and information, and yet have enough experience in the ups and downs of world economies and the "turnover time", should make short-term budget.

Data and information is the Complete Match With Long-Term Budget

Companies that have data and information as well as a complete experience have a greater chance for long-term budget than companies that do not have enough data and information required.

Budget Estimates That Accurate

To be able to do the assessment, a more accurate assessment, required data and complete information. Therefore, for companies that have data and information as well as a complete experience, it has the possibility to perform an accurate assessment, assessment for the long term.

Estimates Budget

Budget contains estimates of what is happening and what to do with the company in the future. A good budget is a budget that can be used as working guidelines, as a means of coordinating the work as well as surveillance tools work, is a budget that contains estimates are accurate, are not much different from the reality of the matter (realization) later. Budget that deviate much from the reality will be no longer useful as a working guideline, as a means of coordinating the work as well as surveillance tools work, so it should be revised.

Production Of Short-Term Fit With Continuous Budget

For the company products include the popular group of the wearer for short term only, then the situation becomes less stable, making it impossible to compile busget long-term, it may even have to make budget gradual (continuous budget).

Production of long-term fit with the long-term budget

For the Vendor whose products include the popular group the users in the long term (eg soap, toothpaste, stationery, sugar, tea and so on), the situation is more stable making it possible to develop a long-term budget.

Goods Grouped According To Duration Taste Of The Wearer

Goods produced by firms can also be grouped according to duration (age) taste of the wearer. Viewed in this way, products can be divided into two groups, namely:
1. products in the long term is still favored by the users
2. products only in the short term favored by the wearer (eg fashion items).

Elastic Product

Elastic product is the number of products sold is strongly influenced by changes in selling prices. In other words, small changes in selling prices have already resulted in changes in the number of significant sales. For companies that their products include elastic product groups, the position becomes less stable, because it is easily shaken as a result of price changes. Thus these companies should develop a short-term budget.

In-elastic Product

In-elastic product is the number of products sold was less affected by changes in selling prices. In other words, large price changes cause only small changes to the number of products that can be sold. For companies that their products include the products that in-elastic, relatively more stable position, because it is not easily shaken as a result of price changes. Thus this kind of company it is possible to formulate a long-term budget.

Product In Light Of Elasticity Of Demand

In light of the elasticity of demand to changes in selling prices, the company produced products can be divided into two groups, namely:
1. in-elastic products
the change in the selling price of their products are not unduly influenced by a number of products sold.
2. elastic products
the change in product prices greatly affect the number of products sold.

Company With A Weak Position Will Be Less Stable

For a company with a weak position in the competition, will be less stable and less is stable. Thus for this kind of company is more suitable for preparing a budget that short-term.

Companies With Strong Position More Steady And Stable

Companies that have a strong position in the competition, will be more steady and stable,
because it is not easily swayed by the actions of its competitors. Thus for the company Such possible to structure a long-term budget.

By company's Narrow Market, Less Stable Position

Companies that rely on a narrow market, its position will be less stable. Because if there was a jolt in the relevant market, then the impact will shake up the corporate life.

Long-term Forecasting For Large Companies

Companies that have a relatively stable position will have greater ability great to do forecasting for long period of time, thus allowing also to develop long-term budget.

Big Firm Are More Stable Position

Companies that have a wide sales market, its position is more stable, because if there is instability at one market is not too great influence on the activity company's overall sales.

Factors That Affect The Appropriate Budget

To select the validity period of the appropriate budget, to consider some factors that affect, among others:

1. broad market product sales generated
2. the company's position in the competition
3. types of products the company produced
4. availability of data and information to do forecasting
5. state of the economy in general.

How If Budget doesn't correspond To Its Realization

Budget that does not correspond to its realization will not be used as a guide work, as a means of coordinating the work and working as a surveillance tool. Budget has lost its function has been properly revised, so that should also be arranged The new budget.

Short Term Budget

For companies who are not able to do assessments-assessments (forecasting) accurately the long run, you should use short-term budget. when the company is forced to draw up a budget with long-term, then later on what was estimated in the budget will be many who deviate from
its realization.

Draw Up A Budget Requires A Lot Of Time And A Lot Of Cost

Therefore, to draw up a budget requires a lot of time and a lot of cost, then there tendency
for companies to develop a budget that includes the long period of time. However, not every
company based on using long-term budget.

Budget Periodic

Periodic budget is a budget that is prepared for one accounting period (full year).While the budget gradual (continuous budget) is a budget that is prepared for a period less than one accounting period (eg only for a period of three months and so on).

Budget Based On The Period Of Time

Budget is divided into two based on the period of time (period) budget, among others:
1. budget strategy
is the budget that goes for the long term, ie a period that exceeds one accounting period

(exceeding one year).
2. tactical budget
is the budget that goes for the short term, ie one accounting period or less.

Certain Period Is Element Of Budgeting

Certain period to come is one element of understanding budgeting, which indicates that the budget into effect for the foreseeable future. this means that what is contained in the budget estimates (forecasts) about what will happen and what will be done in the future.

The Monetary Unit Can Be Made Uniform

With the monetary unit can be made ​​uniform all these different units, making it possible to sum, compared and analyzed further.

Monetary Unit For Company's Activities

Monetary unit is required by each company's diverse activities often have a unity of different units, such as raw materials using weight units (kilograms, etc.), the length unit (meters, etc.) while using union labor working hours or the unity of time (daily, weekly, monthly, etc.).

Budget Expressed In Monetary Form

Some elements of the other budget terms are expressed in monetary form, the unit that can be applied to a variety of activities are diverse-range of companies. The monetary unit of force in America is the "dollar"

Disrupt The Activities

If the budget does not cover all activities of the company, will disrupt the smooth running of the company later on, which means also to disrupt the activities to realize the budget itself.

Budget As Guidelines

Budget is a plan which will serve as guidelines, as a means of coordinating work and supervision tools work, but if there is some activity from companies that are not planned (not included in the budget) means that there are some of the activities of companies that do not have the guidance and direction of work .

Budget Covers All Activities

One element of the sense of a budget that covers all activities of the company that includes all activities to be undertaken by all the parts that exist within the company. Broadly speaking activities (functions) company can be classified into five groups, namely:
1. marketing activities
2. production activities
3. spending activities
4. administrative activities
5. activities related to personnel issues

Comparing The Plan With Realization

By comparing between what is contained in the plan with the realization that the work has been done, then the company can assess whether the company has worked with successful or less successful.
By comparing the work plan with the realization of company's work, it can also unknown what factors are the cause of the deviation (difference) between the realization of the work with a work plan that has been outlined previously.

Why Must Be Comparing The Work Plan With The Realization

By comparing the work plan with the realization of company's work, it can also unknown what factors are the cause of the deviation (difference) between the realization of the work with a work plan that has been outlined previously.

Comparing The Plan With Realization

By comparing between what is contained in the plan with the realization that the work has been done, then the company can assess whether the company has worked with successful or less successful.

The Plan As A Means Of Supervising The Implementation

The plan required by the company as a means of supervising the implementation (realization) of the plan in the future. With the existence of a plan, then the company has a benchmark to assess (evaluate) the realization of the activities of the company later.

Coordinating The Plan

Therefore be used as a means of coordinating the plan, then it should be if the plan is structured in such a way as to provide load-balanced activity between the one with the other parts of the company, according to the capacity and capabilities of each. Thus there will not be a part of the load is too heavy, the opposite is also so there is not a part of a given load is too light.

Plans As A Means of Coordinating The Activity

Plans required by the company as a means of coordinating the activities of all the parts that exist within the company. With the existence of a plan, then the activities of all parts of the company will support each other, shoulder to shoulder together toward the targets. Without a plan, undoubtedly lack of coordination and cooperation among each part of the company, so it would greatly disturb the smooth running of the company later.

Without A Plan, The Company Will Be Is Uncertain

Without a plan, surely the way the company will be is uncertain, because there is no clear guidance about what activities to do and where such activities are directed.
Hence the plan of work serve as a guide, then it should be if the plan drawn up in a systematic, detailed, clear and not cause a variety of interpretations, as well as allowing to be carried out (not too far-fetched).

Plans of The Company As Working Guidelines

Plans required by the company as working guidelines in the future. With the plan means there is a hold on what will be done later, so the running of the company more focused toward the target (destination) company that has been established.

The Future Is Full of Alternative Choices

The future is full of alternative choices, so companies must prepare themselves since the beginning, Which alternative will be chosen later. Various alternative choices such as whether the company will produce long-sleeved shirts or short sleeve shirts, or clothing or clothing waita young boys or girls clothes and so on.

How Important The Companies Should Prepare Themselves

The future full of uncertainty, so companies should prepare themselves since the beginning of what will be done later. Various uncertainties such as whether the competition will be more severe or not, whether the state will prices increased by it or not, whether the availability of raw materials on the market quite a lot or not, whether skilled manpower in accordance with what is expected by the company or not, and so on.

The Reasons of Company To Draw Up Plans

Some of the reasons which prompted the company to draw up plans to deal with the future, include:
1. the future full of uncertainty
2. the future is full of alternative choices
3. plans required by the company as working guidelines in the future
4. plans required by the company as a means of coordinating the activities of all the parts that exist within the company
5. plan required the company as a means of supervising the implementation (realization) of the plan at the time will come

The Example of Plans of Company That Don't Include Budget

Plans of companies that do not include budget for example:
1. plans regarding the use of the institutions distribution channel that will come (agents, wholesalers, small traders, and so on)
2. plans about the media campaign that will be used later (advertisers, publicity, sales promotion, and etc.)
3. plans about the model, shape or design of the product to be produced, and so on.

Budget is only one part only of the company's plans

Budget is only one part only of the company's plans, because there are still companies that plan not included in the budget, because it had no specific specifications such as budget.

Specifications of Budget

Budget is a plan that has specific specifications, such as systematically arranged, covers all activities of the company, expressed in monetary units.

Budget Is A Plan

Budget is a plan, because the budget is the first determination of the activities of companies in time will come.

The Meaning of Plan

The plan is a first determination of the activity or activities to be conducted in the future.

Business Budget

What is meant by Business Budget is a plan drawn up systematically, which covers all activities of the company, which is expressed in units (unity) monetary and valid for a period of time (period) certain to come.
From the definition above, can be interpreted that the Budget has 4 (four) elements,namely:
1. plan
2. Covering all the company's activities
3. Expressed in monetary units
4. Certain period of time to come.