I need help understanding the categorization of line-item budgets, program budgets, and functional budgets matrix for an organization? Can somebody help me understand where salaries go etc.??
Certainly! I can help you understand the categorization of line-item budgets, program budgets, and functional budgets matrix for an organization. In terms of where salaries go in these budgeting approaches, let's break it down.
1. Line-item budget: This budget approach is the most common and straightforward. It categorizes expenses based on specific line items such as salaries, utilities, office supplies, travel expenses, etc. In a line-item budget, salaries would have their own specific category, typically called "Personnel" or "Salaries and Wages." This category would include all expenses related to employee salaries, such as base pay, benefits, bonuses, and payroll taxes.
2. Program budget: A program budget groups expenses based on the different programs or projects within an organization. The purpose is to allocate resources specifically to each program or project and analyze their financial performance separately. In a program budget, salaries would be allocated to the respective programs or projects where employees are directly working. For example, if an organization has a marketing program and an HR program, the salaries of employees working in marketing would be accounted for under the marketing program budget, and the salaries of employees in HR would be accounted for under the HR program budget.
3. Functional budget matrix: A functional budget matrix combines line-item and program budgeting by categorizing expenses according to both functional areas (such as departments or divisions) and line items. It provides a more detailed and comprehensive view of an organization's financial activities. In a functional budget matrix, the salaries category would be included within each functional area, allowing for a breakdown of salary expenses by department or division.
It's important to note that the specific categorization of budgets may vary depending on the organization's structure, industry, and reporting requirements. Therefore, it's advisable to consult your organization's financial policies or accounting department for their specific budgeting practices.