What are the advantages and disadvantages of each budget method?

It is based on a fixed business volume to prepare the budget, the advantage is relatively simple; The disadvantage is that when there is a big gap between the actual business development and the budget business forecast, it is impossible to analyze and evaluate the performance and give full play to the advantages of budget management. Therefore, the fixed budget method is suitable for enterprises and non-profit organizations with relatively stable business or financial activities, and is mostly used for production budget, cost budget and profit budget.

2. flexible budget.

Refers to the budget that cannot accurately predict the business volume during the budget period, according to its dependence on the cost pattern or other factors, according to the business volume that may occur within a certain range during the budget period. Flexible budget has many advantages, such as wider application scope than fixed budget, comparable basis for budget, convincing budget control and variance analysis; Its disadvantage is that the workload will be greatly adjusted if the dependence of business volume is changed during budget.

3. Budget increase or decrease.

This is the traditional method in our country, which means to increase or decrease the budget amount of related projects according to the results of the previous budget implementation and taking into account the changing factors in the next budget period. Because this method is adjusted on the basis of the previous budget implementation results, it is inevitably influenced by the previous fait accompli, so that the unreasonable factors in the previous budget period can be carried forward.

4. Zero-based budget.

In view of the shortcomings of increasing or decreasing the budget method, this method is adopted. For any budget item in any budget period, the budget amount starts from "zero", and according to the work content and business objectives to be achieved in the budget period, the business volume and the scale of its cost expenditure are reconsidered, so as to determine the current budget amount. The advantages of zero-based budget are: reducing expenses, not being affected by the previous budget, and promoting the careful calculation of various departments; The disadvantage is that everything is analyzed from "zero" without reference to previous indicators. There is a lot of work and no basis, and there will be endless disputes.

5. Rolling budget.

Its basic spirit is that its budget will always be 12 months, and every 1 month, it will be adjusted according to the actual situation, and one month's budget will be added at the end of the original budget, so that the whole budget will always be 12 months. Rolling budget method can also be divided into long-term and short-term, that is, a year is divided into four quarters, of which the first quarter arranges the budget on a monthly basis, and the other three quarters are roughly the same.

6. Probability budget.

Because the market changes greatly and there are many variables during the budget period, it is difficult for people to accurately predict these variables (such as the sales price of oil products), which will have a great impact on the whole budget. If there is no way, estimate the range of change, analyze the possibility (probability) of its occurrence within this range, and then adjust other budgets accordingly to calculate the expected value. This method is called probability budget, which is actually a kind of flexible budget.

7. Basic Budget Law.

The initial budget of each department (unit) is set according to the basic array, which reflects and locates the minimum resources needed by a budget responsibility unit to maintain the lowest level of operation. This is the bottom line of the budget. Each incremental array on the basic array represents the resources needed to increase traffic or activities. This method can solve the problem of traditional industrial budgeting.