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Abdullah
 A budget is a plan expressed in quantitative and money

terms.

Talks about the impact and implications of things in

advance, and attempting to take control of situations in

advance.

Budgets can include some or all of income, expenditure, and

the capital to be employed.

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budget can include non monetary as well as monetary
Abdullah
Budgetary control relates to the continuous
comparison of actual with budgeted results
it does this to try to ensure that the objectives of
that policy are achieved
To provide a basis for the change of those objectives
Budgetary control is the analysis of what happened
when those plans came to be put into practice
What the organization did or did not do to correct for
any variations from these plans.

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 Targets can be identified
 Motivation levels of managers increase.
 Communication between the workforce is enhanced.
 Problems can be identified and rectification can be
done before its is too late.
 Going through a budget a business can evaluate its
performance.
 Businesses know their real position rather than
expecting high profits.

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 Any part of the organization for which the budget is

prepared.

 Most common example could be budget for sales

department is a budget centre. Similarly budget for

purchase department is also a budget centre

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 All aspects are connected with each other.

 Sales are production or purchase

 Similarly inflow and out flow of cash is related with sales

and purchase/production.

 Budgets cannot be prepared in isolation.

 All budget centers have to be well coordinated and

accurate for best results.

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 The limiting factor is anything that limits the activity of
an entity.
 Examples of limiting factors are shortages of supply of a
resource and a restriction on sales at a particular price.
 the limiting factor is the one factor that dominates all
other factors
 Examples of limiting factors are:
 Cash
 Raw materials
 skilled labor
 Land
 Equipment

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contr
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The firm’s assessment of the coming season is that the weather will be
hot and dry, and the demand for cricket bats will be high from June
and for the rest of the season (until early September). After
September, EA Sports will concentrate on overseas business (selling
to agents in India, Australia, New Zealand and South Africa).
 
  June  July  August   September October  November  December 

Sales (units)  950  950  750  600  600  500  600 

Stocks at the end of any month is to be set at the level of

100 bats plus 20% of the number of bats scheduled to be
sold in the following month.
Required
For the seven month period June to December 2009,
prepare the stock and purchases budget and the sales
budget: the selling price per bat is £20 and the purchase
price per bat is £15.

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 The format is that we start the schedule with the opening
stock, add purchases and subtract the closing stock to
leave us with the sales amounts.
Purchases Budget (Units): Cricket bats 2009
June July August Sept Oct Nov Dec

Balance 290 290 250 220 220 200 220

b/d
Purchases 950 910 720 600 580 520 640
1240 1200 970 820 800 720 860

Balance 290 250 220 220 200 220 260

c/d
Sales 950 950 750 600 600 500 600
1240 1200 970 820 800 720 860

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 Stock Budget
 (£): Cricket  June July August September October November December
bats

Opening stock 4350 4350 3750 3300 3300 3000 3300

Closing stock 4350 3750 3300 3300 3000 3300 3900

Sales budget 
(£): Cricket  June July August September October November December
bats

Sales 19000 19000 15000 12000 12000 10000 12000

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A tour of new features

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A tour of new features

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 For this business, the sales plans and debtor’s details are as
follows:

Credit Sales
Month 1 Month 2 Month 3
24,000 22,000 30,000

Payment History of Debtors

Which When They Pay How Many of
Debtors Them Pay at This
Time
Debtors within the month of 50%
1 sale
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24,000 X 50% = 24,000 X 0.5 = 12,000
For Month 2, Debtors 2 pay their share of the sales in
Month 1
24,000 X 30% = 24,000 X 0.3 = 7,200
For Month 3, Debtors 3 pay their share of the sales in
Month 1
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24,000 X 20% = 24,000 X 0.2 = 4,800