Two methods: periodic budget, continuous budget.
(1) Periodic budget: in this budget, a plan is made for the next fiscal year that is minimally altered over time. Generally, the expected total costs for each year are spread over the year by month, according to the activity advantage of the factor costs. Thus monthly "wages" are simply spread over the months as 1/12th of the expected cost, while seasonal fluctuations in sales require a little more attention to marketing and production costs and changes in costs during the fluctuations.
(2) Successive (rolling) budgets: In this budget, an experimental annual plan is prepared, where the first quarter is prepared in detail by month, the second and third quarters are prepared in relatively abbreviated form, and the fourth quarter is prepared with only a rough outline, which is revised each month (or perhaps quarterly) by adding the detail required for the following month (or quarter). .
And by adding a new month (quarter), in this way the plan extends forward to the year, this budgeting process charts the impact of changes in the environment and a number of uncertainties, which is very desirable. This is because it forces managers to constantly consider specific conditions for the new year, regardless of where they are in the current fiscal year.
Expanded Information:
What a budget involves:
(1) A program budget that is used to detail program budget (activity budget) that describes the various operations in the future period. For each marketing program, the most logical way to express this budget is to list the expected revenues and the costs associated with them. This results in a non-personal picture of the expected future, which is useful in ensuring a balance between activities, profitability and sales volume. In other words, it's all about planning (see below).
(2) Accountability budgets that illustrate the annual plan based on individual responsibilities. This is essentially a control tool that shows the targeted level of performance, but the individualized costs in this budget must be controllable at the level of planning and reporting.
Responsibility Budget Chart
These two options for dealing with operating budgets are of great significance because the program budget is the result of the planning phase, while the responsibility budget is the starting point for this control phase. The former method need not correspond to the organizational structure, while the latter must. Therefore, the program must be transformed into control before it can be implemented, and the people involved must be informed so that each one of them is aware of his (or her) respective responsibilities.
Baidu Encyclopedia-Budgeting
Baidu Encyclopedia-Financial Budgeting