Page 20 - Budgeting for Managers

boss checks your work
A Budget That
closely, you don’t want any
Works
errors to show up. If your
Nicolai was planning the
boss doesn’t check it
budget for supplies for a small manu-
facturing shop.The parts he needed
closely, you certainly don’t Budgeting: Why and How 3
want the budget to go fur- to buy were cheaper by the caseload
ther upstairs with mistakes than by the box. But Nicolai’s shop
didn’t have much warehouse space, so
in it. Your boss will also
he chose to buy a few boxes at a
check the totals of the
time, instead of a whole caseload. He
budget against available
spent more on the parts, but he was
funds. In some companies working within the space he had.The
and in many government extra money he spent on the parts
agencies, the boss will also was worth it, because it saved the
check the budget against cost of renting a larger space to store
rules and limitations. Some the parts.
organizations require that
top managers approve the line-item budget.
Your boss will also seek or approve funds for the budget. In
a company, you may do work for another department, and then
bill that department for the work you do. Or the cost may be
billed to a client, but your boss will need to make sure that you
are planning to spend the right amount of money for that client.
Some of the money may come from restricted funds, such as a
training budget or government grants. Then you can
Line-item budget A budget where the name of each line
is set, as is the amount of money you can spend on each
item. If you must work with a line-item budget, and it speci-
fies $1,000 for training materials and $500 for office supplies, you can’t
spend $1,100 on training materials and $400 on office supplies.The
authority to move money from one line to another must be granted
at a higher level.
Block budget The opposite of a line-item budget.You are given a
block of money.You present the details of your plan in line items. But,
later on, if you want to spend more on training and less on office sup-
plies, you are free to do so.As long as you don’t overspend the block
of money before the end of the year, the money is under your control.