The Two Types Of Budgeting And Functional Budgets

There are two types of techniques that used by the Putra & Associates are budgeting and breakeven point.

Brewer, Garrison, and Noreen (2010) and Ross (2008) had defined the meaning of budget which is a detailed plan that shows the resources will be allocated and used during a specific time period. It is a detailed plan for the future allocation of money in measurable terms with the formal formatting, which also known as financial plan. The purpose of budgeting is to help the company to balance the capital with the expenditure and the budgeting is being prepared and being used as a benchmark to avoid the exceeding expenditure. However, based on the explaining by Goodluck (2011) budgeting also may refer to the non-financial resources that include

The master budget is a summary of the variety functional budgets, where all the budgeting documents will be combined into a master budget. Therefore, in the master budgets, the budgets have the interrelated relationship between each other. This statement has been pointed out by Weygandt, Kimmel, & Kieso (2010) and master budget has divided into two categories: operating budgets and financial budgets as shown in Illustration 1 in Appendix. Meanwhile, the subsidiary or functional budget is all detailed or specific budget for every departments. The organization only used certain budgeting formats that support to their management and this is the common used by every company such as sales budget, purchase budget, production budget, selling and distribution cost budget, labor cost budget, cash budget and capital expenditure budget (Tripathi &Reddy, 2008). Besides that, Periasamy (2010) also emphasized that the amount of budgeting used is based on the size and nature of the organization.

Secondly, the accounting method and technique that being used by Putra & Associates is breakeven