Operating Budgets? how to calculate?

itdaddy

hey guys, how do I calculate an Operating Budget for IT. As it stands now my budget is used by toner supplies?
toner for 16 laser printers is very expensive. Is there any way to calculate an IT Operations budget?
So I can show my boss what I need as a budget amount each year to operate my IT department.
Thanks guys.

phantasm

You'll need historical data and a bit of forecasting to determine what you'll need to operate for the year.

Pulled the following from http://www.bizcoach.org/budgeting-basics.htm:

Six Steps for Preparing an Operating Budget
1) Review prior period data.
Use historical data as a starting point. If possible, review your results for the past two or three years. Unless you are starting a new business or developing a new product (in which case there is no data to review), this will be the best indication of what's going to happen in the next year.

2) Develop reasonable assumptions.
After reviewing the data, you develop assumptions about the future. Trust your own experience and make educated guesses. What will sales growth be? Is the market for your products or services expanding? How effective will your marketing program be? What will your competitors do? Most business owners have strong sense of intuition about these things- listen to it, don't overanalyze. You can also gather information from trade journals or by talking with the people in your company who are close to the scene (members of the sales team, purchasing staff, etc.).

3) Determine expected revenues.
Use your prior period data and assumptions to make sales projections. Some companies establish a target that is realistic and attainable, others prefer a "stretch" budget that will be difficult, but not impossible, to achieve. However, it is important to keep your projections reasonable- within the constraints of production capacity or a limited sales force on the one hand, and customer demand on the other. Expected revenues include not only the number of products you expect to sell, but also at what price you will sell. If you plan to increase the price, do you expect customers to continue to buy at the higher price, or will sales decrease by some degree?

4) Calculate the expected cost of goods sold.
When calculating the cost of goods sold, be sure to include all direct and indirect costs: material, labor, packaging, storage, etc. Also, don't forget to take beginning inventory into account.

5) Calculate expected operating expenses.
This includes fixed costs such as rent, salaries, utilities, office supplies, etc.

6) Calculate expected operating income.
Presto, there's your operating budget.

Seven Steps for Preparing a Cash Budget
1) Determine the beginning cash balance.
Figure out how much cash will be available at the beginning of the period (year, quarter or month).

2) Add cash receipts.
Determine the expected receipts- collections from customers- that will flow into the cash account each period. Cash collections may vary during the budget period. For example, many retail stores expect to receive most of their receipts during holiday seasons.

3) Deduct cash disbursements.
Based on expected activity, calculate how much cash will be required to cover disbursements- cash payouts- during the period. Disbursements could include payment for materials, rent, payroll, taxes due, and so on. Some of these expenditures may be evenly distributed throughout the budget period, but some (such as material costs) may fluctuate as part of the production process.

5) Calculate the cash excess or deficiency.
To calculate the cash excess or deficiency for a period, subtract the disbursement from the sum of the beginning cash balance and the receipts expected during that period.

6) Determine financing needed for the period.
To calculate the cash excess or deficiency for a period, subtract the total disbursements from total cash available. If, at the end of the period, there is a cash excess, then financing of operations may be covered by the available cash. If, on the other hand, there is a cash deficiency, then you have to plan on financing the period�s cash needs from other sources, such as a bank loan or additional capital contribution. Note: remember to include a stable cash balance beyond the immediate cash needs. For example, a manufacturer may want to maintain a $20,000 cash balance at all times to cover unexpected cash demands.

7) Establish the ending cash balance.
The ending cash balance for each period will include the receipts and loans less the disbursements and financing costs. The ending cash balance becomes the beginning cash balance for the next period.