Budgetary Control

Budget

A Budget is a financial and/or

quantitative Statement, prepared prior to
a defined period of time, of the policy to
be pursued that period for the purpose
of attaining given Objective
 Budgetary Control

Budgetary Control is the establishment

of Budgets relating to the responsibilities
of executives of a policy and the continuous
comparison of the actual with the budgeted
results, either to secure by individual action
the objective of the policy or to provide
basis for its revision
Budgetary Control

Characteristics

Establishment of Budgets

Analysis Of Variation

Taking Remedial Action

Revision Of Budgets
 Budgetary Control

OBJECTIVES

Planning Communication
Co-ordination

Motivation Performance Control

Evaluation
Budgetary Control

Preliminaries for Installation

Creating Budget Centre

Accounting Records

Organization Chart

Budget Committee

Budget Manual

Budget Period

Key Factor
 Functional Budgets

 SALES BUDGET

 PRODUCTION BUDGET

 SELLING & DISTRIBUTION

 ADMINISTRATION

 R & DEVELOPMENT BUDGET

 PRODUCTION BUDGET

COST OF
PLANT PRODUCTION
UTILISATION BUDGET

Material Labour Overheads

Purchase
 Other Budgets

 CASH BUDGET
Capital Expenditure

 PERFORMANCE BUDGET

 ZERO BASED BUDGET

 FIXED-VARIABLE BUDGETS
 Key factor (limiting factor

 Capacity

 Shortage of raw material

 Skilled Labour

 Working Capital
 Government restrictions

 LABOUR HOURS
 POWER SUPPLIERS

 Sales (orders)
 Sales Budget

SALES BUDGET

PRODUCTS TERRITORIES
CUSTOMERS
SALESMEN
MONTH ….QUARTER

HISTORICAL ANALYSIS REPORTS

BY SALESMEN MARKET
ANALYSIS of BUSINESS
CONDITIONS
SPECIAL CONDITIONS
 SALES BUDGET
Period Product A Product B Product C Total
Units Amt Units A Units A Amt
Rs.30 mtR mtRs (Rs)
P.U. s. .20
40 P.U
Jan 4,000 1.20 5,000 P.U.
2.00 10,000 2.00 5.20
Feb 4,500 1.35 6,000 2.40 8,000 1.60 5.35
March 5,000 1.50 5,000 2.00 7,000 1.40 4.90
Total
IQ 13,500 4.05 16,000 6.40 25,000 5.00 15.45
IIQ 12,000 3.60 18,000 7.20 30,000 6.00 16.80
III Q 16,000 4.80 20,000 8.20 32,000 6.40 19.20
IV Q 15,000 4.50 16,000 6.40 28,000 5.60 16.50

Total 56,500 16.95 70,000 28 115000 23 67.95

 Sales Budget

Budget Actual
Area Product Quantity Price Quantity

North A 10,000 10 11,500

B 6,000 5 7,000
South B 12,000 5 12,500

East A 15,000 10 16,500

West A 8,000 10 9,500

B 5,000 5 5,250
Area Product Budget June 30, 05 Budget June 30,04 Actual June 30,03
Q P V Q P V Q P V

North A 12,000 10 12,0000 10,000 10 1,00,000 11,500 10 1,15,000

B 6,500 5 32,500 6,000 5 30,000 7,000 5 35,000

Total 18,500 1,52,500 16,000 1,30,000 18,500 1,50,000

A 3,000 10 30,000 -- -- -- -- --
South
B 13,000 5 65,000 12,000 5 60,000 12,500 5 62,500

Total 16,000 95,000 12,000 60,000 12,500 62,500

East A 17,000 10 1,70,000 15,000 10 1,50,000 16,500 10 1,65,000

B 5,000 5 25,000 -- -- -- -- -- --

Total 22,000 1,95,000 15,000 1,50,000 16,500 1,65,000

West
A 9,000 10 90,000 8,000 10 80,000 9,500 10 95,000

B 5,500 5 27,500 5,000 5 25,000 5,250 5 26,250

Total 14,500 1,17,500 13,000 1,05,000 14,750 1,21,250

Total 41,000 10 4,10,000 33,000 10 3,30,000 37,500 10 3,75,000

A

B 30,000 5 1,50,000 23,000 5 1,15,000 24,750 5 1,23,750

Total 71,000 5,60,000 56,000 4,45,000 62,250 4,98,750

 Production Budgets

PRODUCTION BUDGET
BASED
UPON

Sales Production Stock

Budget Capacity Requirements

CLASSIFIED

Manufacturing
Products Months
Departments
 PRODUCTION BUDGET ….. JUNE 30,05

Product A Jan :7050

Req. To Fulfill S. Prog. 41,000 Feb: 7000

Forecast Cl. Stock 4,000 Mar: 8000
45,000 Apr: 8000
May:8000
Fore cast op. stock 3,000
42,000 Jun: 5000
43,050
Add For Defectives 2 ½ % 1,050
Quantity for Production 43,050
PRODUCTION BUDGET FOR THE YEAR

PRODUCTION SALES CLOSING OPENING PRODUCTION

(UNITS) STOCK STOCK BUDGET
(UNITS) (UNITS) (UNITS)
1+2=3
1 2 3 4
X 4800 800 600 5,000
Y 2400 400 300 2,500
Z 2400 400 800 2,000
MACHINE UTILIZATION BUDGET

Product Units Cost Centre A Cost Centre B

HRs. Total No. of - - -
P.U. M. Hrs. MAC.
Req.
X 5,000 20 1,50,000 60 70 3,50,000 140
Y 2,500 200 5,00,000 200 100 2,50,000 100
Z 2,000 30 60,000 24 20 40,000 16
7,10,000 284 6,40,000 256
 Production Cost Budgets

PRODUCTION COST BUDGET

PROD M IT MATERIA LABOUR F.O.H.
UCT A E L
C M
HI S QT. R C O G H HO C D C T C
N O RE A O P R O USR O EP OS O OS
E F Q. T S E A U LY S T. T T T
M FOR E T R D RS RA T A P.
A PRO P. A E TE L U.
T DU U. TI C
CTI O OS
ON N T
A 1 1 X
2 2 Y
3
4
B 1 1 Z
2 2
3
C 1 1 X
2 Y
3 Z
Total
 Products
A B C
Rs. P. Rs. P. Rs. P.
Unit Unit Unit
D. M.a.t. D. M. 11
10 - 24
D. M. 21
- 40 36
D. M. 31
5 5 -
15 45 60
D. Lab. DEPT. I
10 5 5
12 4 6
DEPT. II
3 6 9
DEPT. III
O. Variable cost 25 15 20
T. Variable Cost 10 20 15
Fixed Production OH. 50 80 95
DEPT. I (P.H. Rs) 20 10 10
DEPT. II (P. H. 3) 18 6 9
12 24 36
DEPT. III (P.H. 6)
Fixed P. O. H. 50 40 55
Product Cost 100 120 150
A.D. M. @ 20% 20 24 30
S. D. @ 40 40 48 60
Total Cost 160 192 240
Profit Selling price sales Qt. 40 24 40
A 15 Lakh /200
200 216 280
B. 10.80/216
C. 16.80 / 280 7500 5000 6000
 PRODUCTION BUDGET

A B C
Sales Quantities 7500 5000 6000
(+) Closing Stock 2400 1600 2000
(-) Opening Stock 3000 2000 2500
Production Quantities 6,900 4,600 5,500

MATERIAL USAGE BUDGET

Product DM 11 DM 21 DM 31
A ( 6,900X5: 6900x5) 34,500 -- 34,500
B (4600x10: 4600x5) -- 46,000 23,000
C (5500X12:500x9) 66,000 42,500 --
1,00,500 95,500 57,500
 PURCHASE BUDGET

DM 11 DM 21 DM 31
Materials 100500 95500 57500
(+) Closing Stock 22050 18450 15750
(-) Opening Stock 24500 20500 17500
Purchase Units 98,050 93,450 55,750
Price P. Unit (Rs.) 2 4 1
Purchase (Value) 1,96,100 3,73,800 55,750
 Cash Budget

Cash Budget is a detailed estimate

of Cash Receipts from all sources
and Cash Payments for all purposes
and the resultant Cash Balance
during the budget period
 Cash Budget
Cash Budget For the Period…..
Particulars Jan Feb Mar
Total
Additions Opening Balance Rs Rs Rs Rs
Budgeted Net Profit
Depreciations
Provisions
Sale Of Plants
Issue Of Capital and Debentures
Reduction in Debtors
Reduction In stock
Accrued Expenses
Increase In Liabilities
Total Additions
Total Cash Available

Deductions
Dividends
Prepayments
Capital Profit
Increase in Stocks
Increase in Debtors
Decrease in Liabilities
Total Deductions
Cl Balance Of Cash
 ZBB - applications

1 Identifying decision Units

2 Listing programmes, activities of each DU

3 Setting goals of activities of each DU

4 Identifying alternatives of activities

5 Designing Decision Package

6 Evaluating & Ranking each DP

7 Allocating Resources according to priority

ZBB -Cycle

Programmes &
ZBB –Decision Packages

1 Mutually Exclusive

2 Incremental
ZBB –Decision Packages
?