The Cost Of The Operating Budget Essay

1610 Words Nov 3rd, 2015 null Page
The operating budget provides financial information regarding anticipating revenue and anticipated expenses. These revenues and expenses reflect the anticipated revenue and expenses for the next year of the company’s operations and shows the companies working budget. It generally shows several different budgets as well. The operating budget is an estimation of all the income and expenses that are forecasted for the company that show as revenue. The operating budget is considered to be a short-term budget, usually lasting during a period of a year. Anything that would be considered a projected budget for the long-term would be excluded. There are two divisions for a company’s budget; the operating budget and capital budget. The capital budget is considered to be costs over the long term, and deals with land, buildings, and major machinery. The purpose of any organization is to make money and increase profits. Companies do not go into business not to make money. Therefore, their goal is to always reduce costs, and increase revenue. The operating budget shows the company how to be successful in increasing their revenue. The budget shows exactly how much money the company has and how many expenses it will generate during that time period. An accurate budget can help managers perform their managerial duties and make good decisions on how functions should work inside of an organization. If a manager is working with a bad inaccurate budget, it can lead to making…

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