If you are applying for funding, you must say what you are planning to spend that funding on. More than that, you need to show how spending that money will help you to answer your research question. So, developing the budget is the perfect time to plan your project clearly.
Anyway, there are really three main types of budgets that are used to control and forecast expenses for businesses. Top Down Budgeting Method A top down approach to budgeting for business means that the estimates for expenses originate at the top of the organization, and at the department level.
In essence, upper management looks at the growth prospects for the company and then sets forth a budget to match those projections. From there, individual budgets are handed down to each department and the manager of each department must manage their business based on that budget.
As its name implies, the budgeting process starts at the top of the organization and focuses on the big picture to assign budgets to the lower levels of the organization.
With this method, the owner of the business or executives typically make most of the budget decisions. Of course, this type of budget has its advantages and disadvantages.
Here is what Chron.
Advantages The advantage of using a top-down budgeting method is that you do not Thesis on budgeting to rely on lower-level managers to come up with budgeting information. Your business can allow the lower-level managers to focus on their departments and what they do best.
If you were to use a bottom-up method instead, you would have to wait for the individual departments to come up with budgets and then compile them all into a company-wide budget.
Using a top-down method often saves time overall. Drawbacks Using the top-down method is not always the ideal choice as it does have a few drawbacks.
For instance, the upper-level executives of a company may not have enough knowledge about the individual departments to come up with a budget. In many cases, the budgets may not be realistic because of this lack of intimate knowledge.
Although they do help departments to understand what is expected of them, they may not provide enough resources for departments to do their jobs well.
In other cases they may allocate too many resources to a particular department. Read the rest of this article at http: Bottom Up Budget Method A bottom up budget starts at the lower levels of the organization.
Department managers create budgets for their department and then send them up the chain of command, so that all of the individual budgets come together to form the entire business budget.
However, the executives still have to approve the department budgets, which are sent back to the managers again and again until managers and executives can agree and finalize the budget. During this process, costs are estimated from the bottom up, starting with such things as salary, materials, overhead and all of the expenses associated with each department.
The level of detail in this type of budget can be quite significant. According to Business Knowledge Resource, this type of budget has the following pros and cons: Disadvantages of bottom-up budgeting One of the primary disadvantages of bottom-up budgeting is that it can lead those who are in charge of tasks and also project managers to ask for more funding than will actually be needed.
This is done in order to ensure that enough money is procured for each task to be accomplished, since most people assume that they will not be given all of the money that they request. This situation can lead to a waste of money and also a situation of distrust between various members of projects and different managers.
Another drawback to bottom-up budgeting is that it is difficult to actually draw up a complete and thorough list of every step and task that will be necessary for the completion of a project.
It is easy to overlook a step of a project or a task, a problem that will lead to major issues in the overall budget. Advantages of bottom-up budgeting One of the major advantages of bottom-up budgeting is that the budget can be quite accurate for individual tasks. As long as no tasks have been forgotten, then this can work quite well.
Also, bottom-up budgeting involves all members of a particular project, which can be a benefit in terms of company morale and involvement. You can read the rest of this article at http: Zero Based Budgeting The final type of business budget is called a zero based budget.
With zero based budgeting, each new budget period starts from scratch. Yahoo Voices listed them as follows:An investigation of budgeting and budgetary. Control at Ernest chemist Badu, Daniel3/5(2).
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Budgeting Budgeting is the systematic method of allocating financial, physical, and human resources to achieve an organization’s strategic goals.