Page 303 - F2 - MA Integrated Workbook STUDENT 2018-19

Budgeting

Budget preparation

4.1 Principle budget factor

The principal budget factor is the factor which limits the activities of the organisation.
The principal budget factor is also known as the limiting factor or key factor.

This factor indicates which budget should be prepared first

For example, if sales volume is the principal budget factor, then the sales budget
must be prepared first. All other budgets should follow from this. It is important to
realise that all budgets are inter-related.

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