Costs & Budgets

Types of Cost

Fixed and Variable Costs:

Nonprofits account for functional expenses-allocation based on purpose of the expense:

Cost Principles in grant budgeting

Costs budgeted for a project grant should be:

What is a budget?

A budget is an estimation of revenue and expenses over a specified future period of time. A budget is a financial plan. It is financial blueprint of the project plan. Pre requisites are:

Types of Budgets: Activity budget

Activity based budget, as the name suggests, covers the costs required for implementing a project activity.

For example: If project strategy is to build the capacity of civil society leaders, workshops are an activity. Workshops costs would be towards hiring resource persons, booking a venue, transportation cost, food, lodging and materials and handouts.

Illustration: Activity Budget for Conducting a Workshop

Particular of Expense

Rate per unit

No of Units

Total in Rs

Trainer Fees

@ Rs 1000 per day

3 days

3,000

Venue

@ Rs 500 per day

3 days

1,500

Rental for Furniture

@ Rs 500 per day

3 days

1,500

Rental for Equipment

@ Rs 100 per day

3 days

300

Catering Exp for Lunch and tea two times

@ 100 per person

55 persons X 3 days= 165

16,500

Conveyance paid to attendees

@Rs 50 per person per day

50 attendees x 3 days = 150

7,500

Printing of handouts

@ Re 1 per page

50pages x 50 copies= 2500 pages

2,500



Grand Total

32,800

Line Item Budget

Line Item Budget


Expenses

Units

# of Units

Unit Rate ($)

Costs ($)

Human Resources:

CEO

Per day

3

350

1,050

Trainer Fees

Per day

2

200

400

Subtotal Human Resources




1,450


Travel:

Trainer Airfare

Per Person

1

300

300

Participant Transportation

Per Person

30

10

300

Subtotal Travel




600


Equipment & Supplies:

Materials & hand-outs

Per Person

30

15

450

Total Equipment & Supplies




450


Other Costs, Services:





Venue

Per Day

2

300

600

Catering

Per Person

30

15

450

Subtotal Other Costs, Services




1050


Subtotal

3550

Overhead (10%)




355

Total

3905

Types of Budget

Incremental budget: New budget by making only some marginal changes to the current budget. The current budget is used as a base to which incremental assumptions are added or subtracted from the base amounts to determine new budget amounts.

Value Proposition Budgeting focuses on allocating the ideal amount of financial resources to make a product or service that provides the highest value to the customer. Another name for Value Proposition Budgeting is Priority Based Budgeting. .

Zero-based budgeting (ZBB) based on efficiency and necessity rather than budget history. Management starts from scratch and develops a budget that only includes operations and expenses essential to running the business; there are no expenses that are automatically added to the budget.

Performance based budget (PBB) is one that reflects both the input of resources and the output of services. The goal is to link funding to results delivered.

Fixed Budget: not modified for variation in actual activity. 

Flexible budget: budget changes in response to activity level

Balanced, Surplus and Deficit budgets:

Budgeting & Budgetary Control

The purpose of budget is to:
Budgetary control is the process to:

 

Please note: Information is for reference only. Read our disclaimer here.


Revision #15
Created 24 April 2024 05:01:15 by Pooja
Updated 23 December 2024 18:46:29 by Pooja