What is Budgeting

A budget is a plan in numbers. It can be financial or based on quantities.

What is a Budget?

A budget is a future plan or forecast written in numbers. numbers in budgets

This plan can be financial and quantity information. 

This budget forecast is then compared to what actually happens.

This is called the actual outcome.


budgets help managers

Budgeting helps management make decisions for the business to run better.

Managers compare the budget to actual results to measure the difference. 


Differences are called variances and can be a good or bad .


This example points out variances as favourable F or unfavourable U



  • If actual revenue is higher than planned - favourable
  • If actual revenue is lower than planned - unfavourable


  • If actual expense is higher than planned - unfavourable
  • If actual expense is lower than planned - favourable

An Example of an Expense Budget

budget example


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October 8, 2019
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