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7.11: Capital Expenditure Budget

  • Page ID
    44251
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    A capital expenditure budget is a list of fixed assets that a company plans to acquire over a future period of time. These assets may be purchased to replace existing assets that are aging or outdated, or they may be additionalresources necessary to meet growing demand. Amounts for these expenditures are usually determined by looking at current costs and factoring in potential pricing adjustments in the future.

    A sample capital expenditures budget follows.

    Capital Expenditures Budget

    Asset

    2020

    2021

    2022

    2023

    2024

    \(\ \quad \quad\)Machinery – Cutting Department

    $12,000

    $18,000

     

    $24,000

    $31,000

    \(\ \quad \quad\)Machinery – Assembly Department

    57,000

    43,000

    18,000

     

    15,000

    \(\ \quad \quad\)Delivery vehicle

     

    35,000

     

    42,000

     

    \(\ \quad \quad\)Office equipment

    21,000

    4,000

    7,000

    1,000

    3,000

    Total

    $90,000

    $100,000

    $25,000

    $67,000

    $49,000

    Budgets provide a financial roadmap for executing the plans management has developed. Keep in mind that they are projections of what will take place in the future rather than reports of past performance. They can be compared to evaluate actual performance once it can be measured. That assessment often leads to discovering strengths and weaknesses that can be considered when making subsequent plans going forward.


    This page titled 7.11: Capital Expenditure Budget is shared under a CC BY-SA 4.0 license and was authored, remixed, and/or curated by Christine Jonick (GALILEO Open Learning Materials) via source content that was edited to the style and standards of the LibreTexts platform; a detailed edit history is available upon request.

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