Cost Budget

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The process of allocating the estimated total cost to each work item to establish the budget, standard and detection system

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The cost budget is to estimate the total Cost allocation Go to each work item to establish budget, standards and detecting system Process. This process can be used to Investment cost Measure and manage, so as to identify problems in advance and take timely measures Corrective measures 。 By job analysis The baseline cost can be obtained by estimating the cost of the project details identified in the structure. Many projects (especially large projects) have multiple benchmark costs to measure different aspects of their costs. For example, an expense plan or Cash flow forecast It is the benchmark cost to measure payment.^[1]

Chinese name: Cost Budget

Foreign name: Budget planning

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Cost Budget

If the enterprise adopts Variable cost method If the changed Manufacturing expenses As expected Distribution rate Determine each Cost Item amount, Fixed expenses As Period expenses , measured by the total amount, and directly in the current period Marginal contribution And then summarize them, Budget cost That can be used to predict costs Amount incurred And as the standard for assessing cost performance.

There are many problems among the functional departments of the headquarters, between the head office and subsidiaries, holding companies, and between subsidiaries and holding companies of the group company Interests , such as capital handover and allocation, investment centralization and decentralization Consumption fund Control and release, etc Financial relationship If it is not handled well, the group company will have two tendencies. One is to eat the pot of rice, enjoy bitterly, and whip fast cattle. The money that should be used more is not used more, and the money that should not be spent is not spent less, and the efficiency of capital use is low; Second Out of control management It is not uncommon for subsidiaries to make disorderly investment and financing, list costs and expenses in a disorderly manner, make false gains and real losses, and drag down the whole group company by the huge debts of a subsidiary or holding company. How to do a good job in group companies financial control 、 Risk Management It is a difficult problem for the financial management of the group company. Practical proof , hold on budget control And assessment is an effective method.^[2]

Budgeting project

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Budgeting The project of mainly includes: cost Expense budget 、 Revenue Budget 、 Balance Sheet Budget . Functional department expense budget financial index Budget Capital Budget 、 cash flow Budget.

(1) Cost budget, including operating cost budget Manufacturing expense budget , Operation Sales Expense Budget 、 Financial expense budget 、 Management expense budget Maintenance expense budget and functional department expense budget.

（2） Revenue Budget , including Main business income Budget, other business income budget, Non operating income Budget, Investment income Budget, other investment income, profit and loss budget of investment processing.

（3） Balance Sheet Budget , including external Investment budget ， intangible assets and Deferred assets Purchase and construction budget, fixed assets Increase or decrease classified budget, sporadic purchase of fixed assets discarding of fixed assets Budget, capital construction budget, Current account Budget, borrowing and bond budget.

(4) The cost budget of functional departments is generally determined by each functional department according to their Budget year Determine the expense base based on the tasks that should be completed, and be responsible for the preparation and submission of the department's expense budget. The financial department is based on the actual amount of the previous year, Comprehensive budget The annual task amount will be adjusted again.

(5) Budget of financial indicators. financial index There are simple ones, such as Net profit , administrative expenses, etc. These indicators are from Accounting statements It can be obtained directly from. In fact, it provides accounting information ； Some indicators are complex, such as Return on investment capital (ROIC)、 Capital fund Rate of return (ROC)、 free cash flow (FCF), before interest and tax operating profit ( EBIT )、 Interest bearing debt ratio (DR) and so on. These indicators cannot be directly obtained from the accounting statements. They can only be obtained through comparative calculation of several financial indicators, which reflects that financial information 。 Such indicators can also be included in the budget to assess and analyze the Return on investment Situation, cash flow at the disposal of the enterprise Operating profit Completion status, debt status, etc., which is more meaningful for comparison and assessment than simple statement figures, and can comprehensively understand and master the enterprise's Financial position and Profitability 。

In addition, there are capital budget, cash flow budget, etc.

Budget is the budget of all employees and the whole process. Every place involving capital activities should have a budget, so that there is no dead corner or omission in the budget.

Budgeting

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Budget document Group Headquarters After repeated discussion and revision by the main departments, the budget form is issued to the subordinate and holding companies in the form of paper documents. In order to facilitate the department summary, the financial department will uniformly prepare the budget form floppy disk , issued uniformly. In order to prevent ambiguity in the understanding of each company, the Finance Department shall hold a budget layout meeting, which requires the budget preparation personnel of subordinate companies, holding companies and functional departments to participate Budget Supervisor Explain the budget principles and requirements item by item.

The principle of budget preparation: the group company is responsible for the reasonable allocation of the enterprise Financial resources Before preparing the budget, the financial department of the group should first define the development direction of each unit and formulate the budget preparation principles according to the company's medium and long-term development plan and strategic development requirements. Budgeting principles generally include:

(1) OK Cost control a key. For the past cost control of the company weak link And propose control requirements for the budget year. For example, administrative expenses can be reduced by 5% on the basis of the previous budget year, while higher requirements can be put forward for enterprises with large space for decline;

(2) OK Investment direction 。 Industries and core enterprises that conform to the strategic development direction of the Group fixed assets Sporadic purchase Financing scale Both of them should give support, and also allow individual enterprises to make breakthroughs in their management expenses on the basis of the previous year, provided that the operating revenue increases significantly compared with the previous year; In principle, any industry or industry that does not conform to the key development of the group company make an additional investment The investment arrangement is maintained within the depreciation source of the current year Simple reproduction , mainly the capital is overpaid;

(3) Ensure the seriousness of the budget. The principal of each unit is required to be responsible for the seriousness of the budget to ensure that Budgeting To be "comprehensive, accurate, orderly, reasonable and compliant" in the whole process of "data collection - review summary - adjustment offset - result confirmation";

(4) Profitable enterprises should increase profits Loss making enterprise Losses should be reduced and cost units should be saved.

Budget adjustment

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The budget document is generally issued in October of each year, and is prepared based on the actual completion from January to September of the current year, and the forecast is used for the next three months. After the budget preparation unit submits the budget within the specified time, some enterprises' budget preparation may not meet the requirements of the headquarters, some of which are technical, but more of which are cost control, revenue, profit and other indicators that cannot meet the requirements of the headquarters, which requires the centralized supervisors to spend a lot of effort to analyze the budget and Accounting statements If necessary, check the relevant figures in the unit to understand the situation and strive to make the budget close to reality.

Issue target responsibility statement

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After the budget of each unit and department has been modified several times to meet the requirements of the headquarters signature Confirmed and issued by the headquarters Budget approval opinion. The approved budget should be fixed in a clear way, which is Objective Responsibility Book (by Head Office Finance Department Unified production). The objective responsibility statement generally includes Business volume 、 business income 、 operating profit 、 Net profit , management expenses, asset optimization financial management And other indicators, right Accounts receivable And companies with large inventories should increase turnover times and other indicators.

How to do well in assessment

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In order to check the implementation and results of the budget, the assessment results of the budget must be linked to the salary and bonus of each unit, and to the appointment, removal, promotion, rewards and punishments of managers. The assessment is generally twice a year. Semi annual assessment is generally based on statement assessment, and it is found that it is not completed as scheduled Scheduled Task The company should focus on analysis and conduct research in the company when necessary, which is due to policy changes Or not If the company cannot complete the task according to the schedule due to human controlled factors Adjustment plan 。 Year end assessment The headquarters leadership should attach great importance to the large scale and long time. Generally, it shall be carried out in the following steps:

Key points of on-site assessment

The appraisers check item by item against the target responsibility statement, focusing on: (1) Asset quality Check, for example, for operational claims that have not been recovered for more than one year, the assessment profit shall be deducted in full according to their amount, and the unprofitable investment shall be deducted in full from the profit, and the inventory that has exceeded half a year（ real estate agency Except) full deduction of profits; (2) Expenses Check. Check social expenses Travel expenses , communication fee, etc Recurring expenses Whether it is overspent; (3) Inspection of consumer funds. Check salary, bonus, welfare, etc Consumer expenditure Yes No Control range Inside.

Analysis and assessment

In the above inspection and assessment, the following situations can be analyzed and assessed: (1) The income of the assessed unit is reduced or the expenditure is increased due to the implementation of the headquarters policy; (2) The headquarters policy has changed, which is incomparable with the budget caliber; (3) Significant changes in national or government policies lead to the reduction of revenue or increase of expenditure of related companies; (4) Significant changes in the market Business unit Controllable, such as the rise of material prices of upstream products, leading to the rise of middle and downstream products Product cost Increase, profit decrease, and exceed the budget forecast range; (5) Occurring manpower Force majeure , such as flood and earthquake Enterprise shutdown , semi shutdown, etc. In case of the above situations, the assessed unit shall report in writing in time during the operation process and obtain the confirmation of relevant departments. During the assessment, sufficient basis shall be provided. After the confirmation of the assessor, the assessment score can be increased. After the on-site assessment, the assessment results shall be signed and confirmed by each unit.

Establish assessment organization

from audit , finance, personnel (salary) business management And other departments to jointly form an assessment team, with the audit department as the leader. Since the audit department does not participate in the budget preparation, it is more detached. It takes the lead in the assessment, which is more objective and fair. It can also find deficiencies in the budget for improvement. The assessment division of the three departments is: audit department assessment financial index Completion status: the financial department assesses the basic financial management work, and can also explain the reasons for the adjustment of individual indicators. The personnel (wage) department assesses the salary, bonus and other consumptive items Fund expenditure The enterprise management department evaluates the basic management of the enterprise, such as business volume indicators.

Issue assessment notice

After the establishment of the assessment institution, the assessment notice will be issued in the name of the group company. The notice includes the specific assessment time, assessment requirements, data to be provided and the division of assessment personnel of each unit.

Meaning of budget

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Correctly prepare the cost budget, which can be the budget period of the enterprise cost control The work specifies the goal of struggle and provides a direct basis for cost management; Moreover, the cost budget can also mobilize and organize all staff to make careful calculations and tap their potential, Control costs Consumption, promoting enterprises to effectively use human resources Make efforts to improve material and financial resources Operation management , as few as possible Labor cost Get better economic performance 。 At the same time, the cost budget can also be used as Property management enterprise operating performance Evaluation criteria of.^[2]

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