Forecasting & Budgeting: Kitchen Production Management
This content is to be customised in kitchen context.
Comparison Chart
| BASIS FOR COMPARISON | BUDGET | FORECAST |
|---|---|---|
| Meaning | A budget is a financial plan expressed in quantitative terms, prepared by the management in advance for the forthcoming period. | Forecast means estimation of future trends and outcomes, based on the past and present data. |
| What is it? | It is the financial expression of a business plan or target. | It is the prediction of upcoming events or trends in business, on the basis of present business conditions. |
| Target | Budget sets the target. | There are no targets. |
| Updation | Annual basis | At regular intervals |
| Estimates | What business wants to achieve | What business will achieve |
| Variance Analysis | Yes | No |
Definition of Budget
A budget is defined as a detailed financial plan for a particular accounting year. It is a written document which is expressed in monetary terms and represents all economic activities of a business organization. It is an ongoing process as it needs to be revised, adjusted, updated and monitored at regular intervals when there is a change in the prevailing conditions.
Definition of Forecast
The projection of business activities for future accounting period on the basis of historical data is known as forecast. The management does it in the light of past experiences and knowledge. Business forecasts predict the forthcoming financial inflows and their sources by evaluating current and previous data and trend analysis.
Forecasting helps the business in taking immediate actions by examining and analyzing the data provided. It also assists in budgeting and planning process.
