It allows studying the evolution of products or expenses.With this, it is possible to cut the cost a little more and increase the income by relying on other departments. When 'pricing' both elements, it is taken into account not to exceed that limit that has been set in the budget, and if doing so it will always be taken into account for future items. Have more control over income and expenses.But the truth is that it does have some advantages that make many companies carry them out.

Advantages and disadvantages of doing itīased on the above that we have seen, many may consider that the budget is really based on a subjectivity, which may not be consistent with reality, nor anticipate possible changes (especially if it is an annual operating budget). But for sure you do not know if the values you have given will be exact or will vary upwards or downwards. And it is that, although the expenses that are going to have in the future, as well as the income, really we don't know if that future will behave that way in other words, we are making an estimate of what income and expenses are thought to be at any given time. Now, surely you have reached a conclusion that makes you doubt the effectiveness of the operating budget. One of the best known operating budgets is the one that shows what are the labor and material expenses compared to the sales that can be made in that period of time. In this way, the company can plan what its operations will be in a certain period of time, because this budget is not perpetual but is normally carried out on a quarterly or annual basis.

That is to say, in it a list will be made of the income that is had with respect to the sale of products and services while, on the other hand, the expenses will be recorded in the production costs. We can define the operating budget as a document where the income, as well as the expenses, of a company should appear, in an ordinary way.

2 Advantages and disadvantages of doing it.

Define operating budget