Budget assumptions
In one sentenceThe expectations on which the budget figures are built, such as the sales growth rate, price and salary increases, and collection timing, written down explicitly.
Simply put
Every figure in the budget has an assumption behind it. Write the assumptions on a separate page: how much will you sell? At what price? When will customers pay?
When actual results differ from the plan, you go back to the assumptions to find which one was wrong, and adjust the next budget.
Worked example
A factory expects to sell 10,000 units. The current unit price is 100 SAR, and it assumes a 5% price increase next year.
Assumed quantity10,000 units
Price after the assumed increase100 × 1.05 = 105 SAR
Sales in the budget10,000 × 105 = 1,050,000 SAR
Don't confuse it with
Financial forecastA forecast estimates what is expected to happen; assumptions are the inputs on which both the forecast and the budget are based.