OPERATING BUDGET Meaning and
Definition
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An operating budget refers to a financial plan or blueprint that outlines an organization's projected income, expenses, and spending targets for a specific period, typically a fiscal year. It serves as a tool for management to control, monitor, and allocate resources efficiently and to evaluate the financial performance of the organization. The focus of an operating budget is on the day-to-day activities and ongoing operations of the business.
The operating budget incorporates various components, such as revenue projections derived from sales forecasts, historical data, or market analysis. It also includes estimating and itemizing the costs associated with production, labor, materials, marketing, administration, and any other operational expenses. By detailing income and expenses, the budget assists in identifying potential surpluses or deficits, thereby aiding in decision-making and allowing for proactive adjustments.
Typically, an operating budget is created through a collaborative effort involving various departments and stakeholders within an organization. It serves as a guide for individual departments to determine their spending limits and helps identify areas where cost-cutting measures can be implemented. The budget can also aid in setting performance targets, as it enables management to compare actual results with projections and take corrective actions when necessary.
Overall, an operating budget acts as a key financial tool for organizations, providing a comprehensive plan that guides financial activities, supports informed decision-making, and ensures efficient allocation of resources to achieve the objectives and goals of the organization.
Common Misspellings for OPERATING BUDGET
- iperating budget
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- opwrating budget
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Etymology of OPERATING BUDGET
The word "operating budget" consists of two main components: "operating" and "budget".
The term "operating" is derived from the verb "operate", which traces back to the Latin word "operari", meaning "to work" or "to be busy with". Over time, this term evolved to include the concept of directing or controlling the functioning of something, such as an organization or a system.
The word "budget" has its roots in the Latin word "bulga", which referred to a pouch or bag. In medieval Latin, the term "bulga" developed into "bajulus" meaning "bag carrier" or "porter". Eventually, in the late 18th century, the word "budget" was adopted in English to specifically denote a financial plan or estimate of income and expenses.
Similar spelling words for OPERATING BUDGET
- operating procedure,
- operating surgeon,
- operating room,
- operating theater,
- operating table,
- operating expenses,
- operating system,
- operating cost,
- operating theatre,
- operating statement,
- operating expense,
- operating capital.
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