Overview of Static Budgeting

A static (fixed) budget is based on a single level of activity, for example, a particular volume of sales or production. The actual results are compared against budgeted (standard) costs only at the original budget activity level.

Static budgeting in LN is called multi-dimension budgeting.

As part of the Controlling process, a budget can be allocated across various cost levels (dimensions). This table lists various cost levels at which the budget can be allocated.


Example - A	Ledger Account--->	Cost Center--->	Product	Sales Area--->	Project
Example - B	Ledger Account
Example - C	Ledger Account--->	Cost Center
Example - D	Ledger Account--->	Cost Center--->	--------->	Sales Area
Example - E		Cost Center--->	Product--->	----------------->	Project

The budget is first allocated to a ledger account. If required, this budget amount or quantity can be split and allocated to other cost types. Therefore, this budget is referred as a multi-dimension budget.