Principle Budget Factor Flashcards
1
Q
What is the principal budget factor
A
When a key resource is in short supply and affects the planning decisions, it is known as the principle budget factor or limiting budget factor.
It is usually assumed in budgeting that sales demand will be the key factor setting a limit to what the organisation can expect to achieve in the budget period.
When the principle budget factor has been determined this should be the starting point for all other budgets
