# Budget vs Budgetary Control
## Distinction
Budget is simply the quantification of a plan — when plans are expressed in numbers, they become a Budget.
Budgetary Control is a wider process having three stages:
1. Stage 1 — Prepare the Budget.
2. Stage 2 — Implement it and compare with actuals.
3. Stage 3 — Find out the reasons for deviations, if any, and take corrective action.
## Classification of Budgets
Budgets are classified under four heads:
### 1. Capacity View
- Fixed Budget — prepared for a single level of activity; does not change with output.
- Flexible Budget — prepared for different levels of activity; adjusts cost behaviour with volume.
### 2. Function View
- Sales Budget
- Production Budget
- Plant Utilisation Budget
- Direct Material Usage Budget
- Direct Material Purchase Budget
- Direct Labour (Personnel) Budget
- Factory Overhead Budget
- Production Cost Budget
- Ending Inventory Budget
- Cost of Goods Sold Budget
- Selling and Distribution Cost Budget
- Administration Expenses Budget
- Research and Development Cost Budget
- Capital Expenditure Budget
- Cash Budget
### 3. Master Budget
A consolidated summary of all functional budgets — typically shown as a budgeted Profit & Loss, Balance Sheet and Cash Flow.
### 4. Period View
- Long-term Budgets — usually 5–10 years (strategic).
- Short-term Budgets — usually 1–2 years.
- Current Budgets — for the current operating period (months/weeks).