Manpower is the most expensive and complex resource in any business.
In a responsibility accounting system, each cost center manager needs to specify the human resources that are available, as well as those that are required, to carry out the operations. For this purpose, a manpower budget is prepared.
Employment costs need careful consideration. They are affected by internal factors (e.g., promotions, bonuses, pay rates, and overtime) and external factors (e.g., inflation, taxation, and social security costs).
Plans to increase or decrease manpower will reflect these factors. Creating a detailed manpower budget enables the manager to make the fullest use of existing resources and, through reorganization when necessary, to improve productivity.
Manpower Budget FAQs
The manpower budget is prepared by estimating the number of employees required to carry out the operations of a cost center. This estimate is based on an analysis of the work to be done and the resources currently available to do it.
Internal factors that affect the preparation of a manpower budget include promotions, bonuses, pay rates, and overtime. External factors that affect the budget include inflation, taxation, and social security costs.
The purpose of a manpower budget is to provide a detailed estimate of the number of employees required to carry out the operations of a cost center.
The goal of a manpower budget is to enable the manager to use existing resources efficiently and, through reorganization when necessary, improve productivity.
There are two main types of budgets: revenue and expenditure. Other branches or divisions of the budget include capital budget, cash budget, and operating budget. A manpower budget is a type of expenditure budget.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.