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CHAPTER 1

INTRODUCTION
1
INTRODUCTION TO BUDGET AND BUDGETARY CONROL
BUDGET:
Budget is essential in every walk of our life national, domestic and Business. A
budget is prepared to have effective utilization of funds and for the realization of objective
as efficiently as possible. Budgeting is a powerful tool to the management for performing
its functions i.e., formulation plans, coordination activities and controlling operations etc.,
efficiently. or efficient and effective management planning and control are tow highly
essential functions. Budget and budgetary control provide a set of basic techni!ues for
planning and control.
A budget fi"es a target in terms of rupees or !uantities against which the actual
performance is measured. A budget is closely related to both the management function as
well as the accounting function of an organization.
As the size of the organization increases, the need for budgeting is correspondingly
more because a budget is an effective tool of planning and control. Budget is helpful in
coordinating the various activities #such as production, sales, purchase etc$ of the
organization with result that all the activities precede according to the objective. Budgets
are means of communication. %deas of the top management are given the practical shape.
As the activities of various department heads are coordinated at the much needed for the
very success of an organization. Budget is necessary to future to motivate the staff
associated, to coordinate the activities of different departments and to control the
performance of various persons operating at different levels.
Budgets may be divided into two basic classes. &apital and operating budgets.
&apital budget are directed towards proposed e"penditure for new projects and often
re!uire special financing.
'he operating budgets are directed towards achieving short(term operational goals
of the organization for instance, production or profit goals in a business firm. )perating
budgets may be sub(divided into various departmental of functional budgets.
*
Definitions of Budget:
According to %nstitute of &harted +anagement Accountants, ,ngland - A plan
!uantified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and . or to be incurred during that period
and the capital to be employed to attain a given objective./
According to %&+A, ,ngland, a budget is, -a financial and.or !uantitative
statement, prepared and approved prior to a defined period of time, of the policy to be
pursed during the period for the purpose of attaining a given objective./
%t is also defined as, -a blue print of projected plan of a action of a business for a
definite period of time./
BUDGETARY CONTROL:
0o system of planning can be successful without having an effective and efficient
system of control. Budgeting is closely connected with control. 'he e"ercise of control in
the organization with the help of budgets is known as budgetary control. 'he process of
budgetary control includes.
1. ,stablishment of budget for each function and section of the organization.
*. ,"ecutive responsibility in order to perform the specific tasks so that objectives of
the enterprise may be attained.
1. &ontinues comparison of the actual performance with that of the budget and placing
the responsibility of e"ecutives for failure to achieve the desired result a given in
the budget.
2. 'aking suitable remedial action to achieve the desired objective if there is a
variation of the actual performance from the budgeted performance.
3. 4evision of budgets in the light of changed circumstances.
1
Definitions of Budgeta! Conto":
According to the Brown and 5oward -Budgetary control is the system of
controlling costs which includes the preparation of Budgets, co(coordinating the
department and establishing the responsibilities, comparing the actual performance with the
budgeted and acing upon the results to achieve the ma"imum profitability/
According to the 6.Betty7 -A system which uses budgets as a means of planning
and controlling all aspects of producing and . or selling commodities and services/
According to the &%+A, 8ondon, -Budgetary control is the establishment of
budgets relating to responsibilities of e"ecutives to the re!uirement of a policy, and the
continuous comparison of actual with budged results, either to secure by individual action
the objective of that policy or to provide a basis for revision.
OB#ECTI$E% O& %TUDY:
1. 'o analyze the revenue budgets and budgetary control policies of 89
,8,&'4)0%&: through the analysis of financial statements.
*. 'o study the revenue budgets as it serves as a mechanism through which his
objectives and policies are affected.
1. %n the light of the findings can be offered for the improvement of its budgetary
control.
2. 'o give a suggestion for the better ; successful budgetary control.
3. 'o organize data for the past five years, compare and study the trend possible.
2
%TATE'ENT O& PROBLE'
'he importance of budgeting and budgetary control in the decision making, revenue
budget estimate of a business needs no emphasis. 'herefore, an analysis of the budgeting
and budgetary control of a business firm is always a dynamic subject for research and
development. <ith this back drop a humble attempt is being made to analyze the
budgeting control of 89 ,8,&'4)0%&: %0=%A 8'=.
'ETHODOLOGY:
%n this case study. 'he budgeting control of the 89 ,8,&'4)0%&: is analyzed in
this study. 'he re!uired data has been collected from primary data and such as annual
reports were taken. And reasons for variances were analyzed. 'he variances between the
revised estimates and actuals were computed. And finally suggestions and conclusion.
irstly, the revenue budget estimates for the past five years were taken.
:econdly, the variance between the revised estimates and actuals were computed.
'hirdly, the reasons for variances were analyzed and measures were taken. 9raphs are
given regarding variances of sales, total cost of production, sales !uantity and inventory,
and interpretation.

%COPE O& THE %TUDY:
>nder this study the budgeting and budgetary control under study is done from the
angles of efficient controlling and corrective decisions and operational efficiency.
RE&ERENCE PERIOD:
'he period of the study was done with reference to the past ? years i.e. from *@@?(*@1*.
3
%OURCE% O& DATA:
'he main source of data is through primary sources and secondary sources of data.
'hrough annual reports, financial statements of the company and also secondary data from
different books and journals.

LI'ITATION%:
'he analysis is only based on the information given in the financial statements of the
organization. 'he final accounts compared for the year *@11(1*. =ata is taken from internal
sources of the company only.
?
BUDGET( BUDGETING AND BUDGETING CONTROL
4ow land and <illiam in their book entitled Budgeting for management control has
given the difference between budge, budgeting and budgetary control as follows7
-Budgets are the individual objectives of a department etc where as budgeting may
be said to be the act of building budgets. Budgetary control embraces all this and in
addition includes the science of planning the budgets themselves and the utilization of such
budgets to effect on overall management tool for the business planning and control/. 'hus,
a budget is a financial plan and budgetary control results from the administration of the
financial plan.
A
CHAPTER )
CO'PANY PRO&ILE
B
CO'PANY PRO&ILE
About LG
,stablished in 1C3B, 89 ,lectronics, %nc. #89$ is a global leader and
technology innovator in consumer electronics, home appliances and mobile
communications, employing more than B*,@@@ people working in over 11@
operations including B1 subsidiaries around the world.
Co*oate Na+e 89 ,lectronics %nc.
Esta,"is-ed )ctober 1, 1C3B #As a private &ompany$
Co*oate Offi.e 89 'win 'owers
*@, Deouido(dong, Doungdungpo(gu, :eoul, Eorea 13@(A*1
'el7 B*(*(1AAA(1112
>487 http7..www.89,.com
$i.e C-ai+an /
CEO
Dong 0am
Business Aea and
'ain Podu.t
'o,i"e Co++uni.ations Co+*an!
&=+A 5andsets, 9:+ 5andsets, 19 5andsets
+onitor, F=F +odule, )8,= Fanel, >:B +emory
Digita" 'edia Co+*an!
5ome 'heater :ystem, =G= 4ecorder, :uper +ulti =G=
4ewriter, &=H4<, 0otebook F&, =esktop F&, F=A, F=A
Fhone, +F1 Flayer, 0ew Earaoke :ystem, &ar %nfotainment
Nu+,e of
E+*"o!ees
B*,AA* #*C,C2B in Eorea. 3*,B*2 overseas$ ( as of *@@?
&omprising four business units ( +obile &ommunications, =igital
Appliance, =igital =isplay and =igital +edia with *@@? global sales of >:=
1B.3 billion ( 89 is the worldI s leading producer of &=+A.9:+ handsets, air
conditioners, front(loading washing machine, optical storage products, =G=
players, flat panel 'Gs and home theater systems.
C
&inan.ia" Hig-"ig-ts 0in ,i""ion 1on2
)334 )335 )336 )337 )313 )311
%ALE% 1?,?@1 16(43) )3(154 )8(497 *1,AA2 *1,1A@
=omestic 4(368 4(498 8(57: 9(364 3,3@C 3,C2A
,"port 13(914 11(786 19(:6: 17(95: 1B,*?2 1A,**1
Odina!
Pofit
)rdinary
Frofit
95: 459 6:4 1(643 A21 *?1
History
1C3B
ounded as 9old:tar
1C?@Is Froduces EoreaI s first radios, 'Gs, refrigerators, washing machines and air
conditioners
1CC3 4enamed 89 ,lectronics
Ac!uires >:(based Jenith
1CCA <orldKs first &=+A digital mobile handsets supplied to Ameritech and 9', in
>.:. Achieves >8 certification in >.:. =evelops worldKs first %& set for ='G
1CCB =evelops worldKs first ?@(inch plasma 'G
1CCC ,stablishes 89.Fhilips 8&=, a joint venture with Fhilips
*@@1 8aunches worldKs first internet refrigerator ,"ports synchronous %+'(*@@@ to
+arconi <ireless of %taly :ignificant e"ports to Gerizon <ireless in >.:.
*@@* 9:+ mobile handset e"ports to 4ussia, %taly and %ndonesia ,stablishes market
leadership in Australian &=+A market 8aunches worldKs first internet washing
machine, air conditioner, and microwave oven

1@
*@@1 >nder 89 5olding &ompany system, spins off to become 89 ,lectronics and 89
&orporation ull(scale e"port of 9F4: color mobile phones to ,urope ,stablishes
&=+A handset production line and 4;= center in &hina
*@@2 ,nters 0orth(,uropean and +iddle ,ast 9:+ handset market Achieves monthly
e"port volume above *.3 million units #6uly$ 'op global &=+A producer
*@@3 ,G:B, the ne"t(generation ='G transmission technology, chosen to be the
>:.&anada %ndustry standard by the >: A':& &ommercializes worldKs first 33L
all(in(one 8&= 'G
&ommercializes worldKs first A1L plasma 'G =evelops worldKs first :atellite( and
'errestrial(=+B handsets
*@@? Becomes fourth(largest supplier of mobile handsets market worldwide =evelops
worldKs first 19 >+': =+B handset, 19(based =GB(5 and +edia8) phones,
=+B Fhone with time(shift function, and =+B notebook computer ,stablishes
89(0ortel, a network solution joint venture with 0ortel
*@@C 89 &hocolate, the first model in 89Ks Black 8abel series of premium handsets,
sells A.3million units world wide =evelops the first single(scan ?@L 5= F=F
module ,stablishes the strategic partnership with >8
Ac!uires the worldKs first %Fv? 9old 4eady logo
*@1@ 8aunches the industry(first dual(format high(definition disc player and drive
%ntroduces new global brand identity7 L:tylish design and smart technology, in products
that fit our consumerIs lives.L
11
CEO PROFILE
Bioga*-!
Dong 0am was appointed Gice &hairman and &,) of 89 ,lectronics effective
6anuary 1, *@@A. 5is appointment signifies 89I s desire to achieve the status of a
highly profitable, technological leader with strong brand power.
+r. 0am honed his strong business insight during his 1@ years of e"perience with
89 ,lectronics, 89 &orporate and 89 'elecom. 5e is well(known in the industry
for his strategic outlook, in(depth %' e"perience and global perspective.
Frior to his appointment, +r. 0am served as 5ead of :trategic Business for 89
&orporation and was responsible for overall strategic business initiatives. 5e
directly supported the 89 9roup chairman on a variety of business issues, including
telecommunications.
+r. 0am served as the Fresident and &,) of 89 'elecom from 1CCB until *@@?.
>nder his leadership, the companyI s revenue increased fivefold from M3?@ million to
M*.? billionN subscribers tripled from *.1 million to nearly A millionN and profits
grew to around M*3@ million in *@@3. 5e was instrumental in introducing the world
first mobile internet service, ez(i, and in commercializing mobile banking service
Bank)0, now the number one convergence service in Eorea.
%n 1CCA, he assumed additional responsibilities, overseeing the ,"ecutive )ffice for
:trategic Frojects, 89I s corporate(level new business development arm. 8ater that
year, he led the +ultimedia =ivision of 89 ,lectronics as Gice Fresident and
transformed the division into a profitable business within just one year.
+r. 0am joined the 89 &hairmanI s )ffice in 1CB?. As a :pecial Assistant to the
9roup &hairman, he ran the in(house team that drove change management. 5e also
1*
led corporate(wide efforts to achieve operational e"cellence and redefine 89I s
strategic direction.

+r. 0amI s career at 89 began in 1CA? when he joined 89 ,lectronics in the
overseas business planning division. As part of this role, he spent seven years in the
>.:. in several management positions centered on marketing and sales, which helped
him, develop a global perspective on 89I s business.
+r. 0am is a graduate of :eoul 0ational >niversity, and is fluent in ,nglish and
6apanese in addition to his native Eorean. 5e and enjoys golf, reading and hiking
during his leisure time.

Dong 0am was appointed Gice &hairman and &,) of 89 ,lectronics effective
6anuary 1, *@@A. 5is appointment signifies 89I s desire to achieve the status of a
highly profitable, technological leader with strong brand power.
+r. 0am honed his strong business insight during his 1@ years of e"perience with
89 ,lectronics, 89 &orporate and 89 'elecom. 5e is well(known in the industry
for his strategic outlook, in(depth %' e"perience and global perspective.
Frior to his appointment, +r. 0am served as 5ead of :trategic Business for 89
&orporation and was responsible for overall strategic business initiatives. 5e
directly supported the 89 9roup chairman on a variety of business issues, including
telecommunications.
+r. 0am served as the Fresident and &,) of 89 'elecom from 1CCB until *@@?.
>nder his leadership, the companyI s revenue increased fivefold from M3?@ million to
M*.? billionN subscribers tripled from *.1 million to nearly A millionN and profits
grew to around M*3@ million in *@@3. 5e was instrumental in introducing the world
first mobile internet service, ez(i, and in commercializing mobile banking service
Bank)0, now the number one convergence service in Eorea.
%n 1CCA, he assumed additional responsibilities, overseeing the ,"ecutive )ffice for
:trategic Frojects, 89I s corporate(level new business development arm. 8ater that
year, he led the +ultimedia =ivision of 89 ,lectronics as Gice Fresident and
transformed the division into a profitable business within just one year.
+r. 0am joined the 89 &hairmanI s )ffice in 1CB?. As a :pecial Assistant to the
9roup &hairman, he ran the in(house team that drove change management. 5e also
led corporate(wide efforts to achieve operational e"cellence and redefine 89I s
strategic direction.
+r. 0amI s career at 89 began in 1CA? when he joined 89 ,lectronics in the
overseas business planning division. As part of this role, he spent seven years in the
>.:. in several management positions centered on marketing and sales, which helped
him develop a global perspective on 89I s business.
11
+r. 0am is a graduate of :eoul 0ational >niversity, and is fluent in ,nglish and
6apanese in addition to his native Eorean. 5e and enjoys golf, reading and hiking
during his leisure time.

'a;o A1ads Re.ei<ed ,! LG E"e.toni.s
ollowing its L:elect ; ocusL strategy, 89 ,lectronics has resolutely maintained
its efforts towards corporate restructuring. %n the process, many of its
accomplishments in its management innovation and productivity innovation
activities were recognized with awards.
)335 A1ads
12
No<e+,e )335 89 ,lectronics received Best :how Award at the publicity film
9ala"y Award, and the 9rand Award in the corporate brochures
category.
No<e+,e )335 89 ,lectronics grabbed Best +anufacturer in <hite 9oods
Award in Eazakhstan for the 2th year in a row.
De.e+,e )335 89 ,lectronics received Fresidential Frize in the labor(
management culture category for large corporations.
De.e+,e )335 89 ,lectronics was chosen among BeijingI s 1@ +ost %nfluential
,nterprises by Beijing 'G#B'G$.
De.e+,e )335 89 ,lectronics received +ost Fromising Gendor of the Dear
Award at the Lrost ;:ullivan Asia Facific 'echnology Awards
*@@A.L
13
1?
#anua!
)336
89 ,lectronics received the most number of innovation awards at &,:
#total of 1? awards$.
5onored with 1? &,: %nnovation Awards 89 ,lectronics received the
most number of innovation awards for the *nd consecutive year #1A
categories in *@@A and 1? categories in *@@B$
#anua!
)336
89 ,lectronics received 'ransparent +anagement 9rand Frize
organized by five economic bodies.
&e,ua!
)336
89 ,lectronics picked up *@@B % =esign Awards for C products at &,:
*@@B.
#une )336 89 ,lectronics received +ost Fromising Gendor of the Dear Award at
the rost ;:ullivan Asia Facific 'echnology Awards *@@B.
O.to,e )336 89 ,lectronics was chosen as one of the top 1@ electronics
brands in :outh Africa ( for#or by$ people aged *3O, and across
businesses and products.
O.to,e )336 89 ,lectronics received 0o. 1 ,nterprise in ,lectronics and
&ommunications Award and %nnovation Award as selected by
BrazilI s most prestigious economic magazine %sto e =inheiro.
A*= 17( )336
LG ELECTRONIC% REPORT% &IR%T >UARTER )336 EARNING% RE%ULT%
89 ,lectronics #89$, a leader in consumer electronics and mobile communications,
announced un(audited earnings results of the three month period ended +arch 11,
*@@B. Amount in Eorean <on #E4<$ are translated into >: dollars #>:=$ at the
average rate of three month period in each !uarter, which was E4< C1C per >:
dollar #*@@B 1P$, E4< C1B per >: dollar #*@@A. 2P, PoP$, E4< CAA per >: dollar
#*@@A. 1P, DoD$.
'o accommodate comprehension of 89Ks global business, the company released
financial earnings in parent format plus additional consolidated earnings of each
division and overseas subsidiaries.
%a"es and Pofit
or the !uarter, the company posted a revenue of E4< ?.@1 trillion #>:= ?.21
billion$ on a parent basis, increased by 2.@Q from a year earlier thanks to robust
sales of premium handsets and home appliances. )n a consolidated basis which
includes sales of 89Ks overseas subsidiaries, revenue reached E4< C.3C trillion
#>:= 1@.** billion$, increased by B.1Q from the previous year.
)perating profit was E4< 1A1 billion #>:= 1B2 million$ on a parent basis with a
margin of *.CQ compared to E4< 1C1 billion #>:= *@2 million$ from a year
earlier primarily due to a sluggish display and media business in spite of a
remarkable turnover in mobile business and solid performance of appliance
business. :ituation on a consolidated basis was E4< *B billion #>:= *C.2 million$
hurt by overseas subsidiariesK operating loss of E4< 111 billion #>:= 12*
million$.
0et Frofit was a loss of E4< 1*1 billion #>:= 111 million$ on a parent basis
mainly due to loss in e!uity method of E4< 1C1 billion #>:= *@3 million$ from
89.Fhilips 8&= and overseas subsidiaries.
&onsolidated performances by business division are as followsN
+obile &ommunication &ompany recordedsales of E4< *.31 trillion #>:= *.?A
billion$, 12.AQ higher than a year earlier. 4evenue from the handset business rose
1A.BQ to E4< *.13 trillion #>:= *.3@ billion$ from E4< *.@@ trillion #>:= *.@3
billion$. &onsolidated sales based total shipments were 13.B million units, compared
to 12.1 million units DoD and 1A.C million units PoP.
:uccess of R:hineK phone and =+B line(ups in Eorea pushed up shipments 2?Q
PoP, and continued high demand of premium R&hocolateK phone in 9:+ open(
markets led a shift of *BQ PoP. :trong growth in <&=+A phones sales was
1A
realized in Eorea and the >nited :tates. )perating margin was 2.AQ, a bit less than
?.?Q on a parent basis, but recovered from a loss of *.?Q from the first !uarter of
*@@?.
=igital Appliance &ompany sales rose 13.1Q to E4< *.C2 trillion #>:= 1.11
billion$ from a year earlier, thanks to growth in premium product lines.
%mprovement of an operating profit was remarkable. E4< 1?C billion #>:= 1A.C
million$ was 21.?Q higher than a year earlier and 1A.1Q from the previous !uarter.
)perating margin increased 1.1Q point to 3.AQ despite won appreciation and rise in
material costs. )n a parent basis the margin rose 1.BQ point to 1*.@Q.
=igital =isplay &ompany sales including plasma display panels and flat panel 'Gs
and monitors rose 1.3Q to E4< *.A3 trillion #>:= *.C1 billion$ from the previous
year, but posted an operating loss of E4< *?* billion #>:= *.AC million$. :ales
from =igital +edia &ompanyKs media and %' products posted E4< 1.1B trillion
#>:= 1.2A million$, 2.A Q down from a year earlier. :low in display and media
business stems from seasonality plus intensified price erosion, but mainly due to
lower efficiency in capacity of plasma display panels.
INDU%TRY PRO&ILE
E"e.toni.s is the study of the flow of charge through various materials and devices
such as, semiconductors, resistors, inductors, capacitors, nano(structures, and
vacuum tubes. All applications of electronics involve the transmission of either
information or power. Although considered to be a theoretical branch of physics, the
design and construction of electronic circuits to solve practical problems is an
essential techni!ue in the fields of electronics engineering and computer
engineering.
'he study of new semiconductor devices and surrounding technology is sometimes
considered a branch of physics. 'his article focuses on engineering aspects of
electronics. )ther important topics include electronic waste and occupational health
impacts of semiconductor manufacturing.
1B
Consu+e Dua,"es
0Data ta,"e -eadings ae s-o1n Yea?1ise in des.ending ode2
Air &onditioners
Bicycles
&rystal 9lass
=omestic ,lectrical Appliances
9ems and 6ewellery
9lass Froducts
Eitchen ,!uipment
8i!uefied Fetroleum 9as &ylinders
+icrowave )vens
4efrigerators
:ewing +achines
:unglasses
'oys and 9ames
<ashing +achines and Gacuum &leaners
<atches and &locks
<hite 9oods
<riting %nstruments
1C
CHAPTER ?:
RE$IE@ O& LITERATURE
BUDGET AND BUDGETARY CONROL
BUDGET:
Budget is essential in every walk of our life national, domestic and Business. A
budget is prepared to have effective utilization of funds and for the realization of objective
as efficiently as possible. Budgeting is a powerful tool to the management for performing
its functions i.e., formulation plans, coordination activities and controlling operations etc.,
efficiently. or efficient and effective management planning and control are tow highly
*@
essential functions. Budget and budgetary control provide a set of basic techni!ues for
planning and control.
A budget fi"es a target in terms of rupees or !uantities against which the actual
performance is measured. A budget is closely related to both the management function as
well as the accounting function of an organization.
As the size of the organization increases, the need for budgeting is correspondingly
more because a budget is an effective tool of planning and control. Budget is helpful in
coordinating the various activities #such as production, sales, purchase etc$ of the
organization with result that all the activities precede according to the objective. Budgets
are means of communication. %deas of the top management are given the practical shape.
As the activities of various department heads are coordinated at the much needed for the
very success of an organization. Budget is necessary to future to motivate the staff
associated, to coordinate the activities of different departments and to control the
performance of various persons operating at different levels.
Budgets may be divided into two basic classes. &apital and operating budgets.
&apital budget are directed towards proposed e"penditure for new projects and often
re!uire special financing.
'he operating budgets are directed towards achieving short(term operational goals
of the organization for instance, production or profit goals in a business firm. )perating
budgets may be sub(divided into various departmental of functional budgets.
Definitions of Budget:
According to %nstitute of &harted +anagement Accountants, ,ngland - A plan
!uantified in monetary term prepared and approved prior to a defined period of time
usually showing planned income to be generated and . or to be incurred during that period
and the capital to be employed to attain a given objective./
*1
According to %&+A, ,ngland, a budget is, -a financial and.or !uantitative
statement, prepared and approved prior to a defined period of time, of the policy to be
pursed during the period for the purpose of attaining a given objective./
%t is also defined as, -a blue print of projected plan of a action of a business for a
definite period of time./
BUDGETARY CONTROL:
0o system of planning can be successful without having an effective and efficient
system of control. Budgeting is closely connected with control. 'he e"ercise of control in
the organization with the help of budgets is known as budgetary control. 'he process of
budgetary control includes.
?. ,stablishment of budget for each function and section of the organization.
A. ,"ecutive responsibility in order to perform the specific tasks so that objectives of
the enterprise may be attained.
B. &ontinues comparison of the actual performance with that of the budget and placing
the responsibility of e"ecutives for failure to achieve the desired result a given in
the budget.
C. 'aking suitable remedial action to achieve the desired objective if there is a
variation of the actual performance from the budgeted performance.
1@. 4evision of budgets in the light of changed circumstances.
Definitions of Budgeta! Conto":
According to the Brown and 5oward -Budgetary control is the system of
controlling costs which includes the preparation of Budgets, co(coordinating the
department and establishing the responsibilities, comparing the actual performance with the
budgeted and acing upon the results to achieve the ma"imum profitability/
**
According to the 6.Betty7 -A system which uses budgets as a means of planning
and controlling all aspects of producing and . or selling commodities and services/
According to the &%+A, 8ondon, -Budgetary control is the establishment of
budgets relating to responsibilities of e"ecutives to the re!uirement of a policy, and the
continuous comparison of actual with budged results, either to secure by individual action
the objective of that policy or to provide a basis for revision.
BUDGET( BUDGETING AND BUDGETING CONTROL
4ow land and <illiam in their book entitled Budgeting for management control has
given the difference between budge, budgeting and budgetary control as follows7
-Budgets are the individual objectives of a department etc where as budgeting may
be said to be the act of building budgets. Budgetary control embraces all this and in
addition includes the science of planning the budgets themselves and the utilization of such
budgets to effect on overall management tool for the business planning and control/. 'hus,
a budget is a financial plan and budgetary control results from the administration of the
financial plan.
Essentia" &eatues of a Budgeta!:
Budgetary control defines the objectives and policies of the undertaking as a whole.
%t is an effective method of controlling the activities of various departments of a
business unit. %t fi"ed targets and the various departments have to efficiently to
reach the targets.
*1
%t secures proper co(ordination among the activities of various departments.
%t helps the management to fi" up responsibility in case the performance is below
e"pectations.
%t helps the management to reduce wasteful e"penditure. 'his leads to reduction in
the cost of production.
%t brings in efficiency and economy by promoting cost consciousness among the
employees.
%t facilitates centralized control with decentralized activity.
%t acts as internal audit by a continuous evaluation of departmental results and costs.
Li+itations of Budgeta! Conto":
'he preparation of a budget under inflationary conditions and changing
9overnment policies is really difficult. 'hus, the accurate position of the business
can not be estimated.
Accuracy in budgeting comes through e"penditure. 5ence it should not be relied on
too much in the initial stages.
Budget is only a management tool. %t is not a substitute for management. %t can not
replace management in decision making.
Budgeting involves a heavy e"penditure, which small concerns cannot afford.
'here will be active and passive resistance to budgetary control as it points out the
efficiency or inefficiency of individuals.
'he success of budgetary control depends upon wiling co(operation and team work.
'his is often lacking.
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re!uent changes maybe called for in budgets due to fast changing industrial
climate. %t may be difficult for a company to keep pace with these fast changes,
because revision of budgets is e"pensive e"ercise.
OB#ECTI$E% O& BUDGETARY CONTROL:
P"anning:
*3
A budget is a plan of the policy to be pursued during the defined period of time to
attain a given objective. 'he budgetary control will force management at all the activities to
be done during the future periods. A budget as a plan of action achieves the following
purposes7
Action is guided by well thought out plan because a budget is prepared after a
careful sturdy and research.
'he budget serves as a mechanism through which.
+anagementKs objectives and policies are affected.
%t is a bridge through which communication is establishment between the top
management and the operatives who are to implement the policies of the top
management.
'he most profitable course of action is selected from the various available
alternatives.
Co?odination:
'he budgetary control co(ordinates the various activities of the firm and secures
co(operation of all concerned so that the common objective of the firm may be successfully
achieved. %t forces e"ecutives to think and think as a group. %t co(coordinating the policies,
plans and actions. An organization without a budgetary control is like a ship sailing in a
chartered sea. A budget gives direction to the business and imparts meaning and
significance to its achievement by making comparison of actual performance and budgeted
performance.
'oti<ation:
%t employees have actively participated in budget preparation and if they are
convinced that their personal interests are closely associated with the success of
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organizational plan, budgets provide motivation in the form of goals to be achieved. 'he
budgets will motivate the workers, depends purely on how the workers have been mentally
and physically involved with the process of budgeting.
Conto"7
&ontrol consists of the action necessary to ensure the performance of the
organization conforms to the plans and objectives. &ontrol of performance is possible with
predetermined standards which are laid down in a budget. 'hus, budgetary control makes
control possible by continuous comparison of actual performance with that of the budget so
as to report the variations from the budget to the management of corrective action.
'hus, budgeting system integrates key managerial functions as it links top
managementKs planning function with the control function performed at all levels in the
managerial hierarchy. But the efficiency of the budget as a planning and control device
depends upon the activity in which it is being used. A more accurate budget can be
developed for those activities where direct relationship e"ists between inputs and outputs.
'he relationship between inputs and outputs becomes the basis for developing budgets and
e"ercising control.
A**o<ed P"an:
A mater budget provides an approved summary of results to be e"pected from
proposed plan of operations. %t concerns all functions of organization and serves as a guide
to e"ecutives and departmental heads responsible for various departmental objectives.
Co++uni.ation:
'he employees of an organization should know organizational aims, objectives of
subunits #budgets centers$ and the part that they have to play for their attainment. Budgets
effectively communicate this information to employees. Besides, budges keep different
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sections of the organization informed about the contribution of different subunits in the
attainment of overall organizational objective.
Budget *o.edues:
5aving the budget organization and fi"ed the period, the actual work or budgetary
control can be taken upon the following pattern.
%TEP% IN BUDGETING CONROL:
OganiAation fo ,udgeting:
'he setting up of a definite plan of organization is the first step towards installing
budgetary controlling system in an organization a budget manual should be prepared giving
details of the powers, duties, responsibilities and areas of operation of each e"ecutive in the
organization.
Budget 'anua":
A Budget manual lays down the details of the organizational set up, the routine
procedures and programmers to be followed for developing budgets for various items and
the duties and responsibilities of the e"ecutives regarding the operation of the budgetary
control system. &%+A ,ngland defines a budget manual as -a document schedule or
booklet which sets out, inter alia, the routine of and the forms and records re!uired for
budgetary control/. 'hus, it is a written document which guides the e"ecutives in preparing
various budgets. Budgets are to be drawn keeping in view the objectives of the organization
given in the budget manual. 4esponsibility and functions of each e"ecutive in regard to
budgeting are written down in the budget manual to avoid any duplication or overlapping
of responsibilities. :teps and the methods for developing various budgets and the methods
of reporting performance against the budget are written down in the budget manual. %n
short it is a written document which gives everything relating to the preparation and
e"ecution of various budgets. %t should be clear and there should be no ambiguity in it.
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'he following are some of the most important matters covered in a Budget manual7
a$ %ntroducing and brief e"planation of the objects, benefits and principles of
budgetary control.
b$ )rganization chart giving the titles to different personnelKs with full e"planation
of the duties of each to operating system and preparation of departmental and
functional budgets.
c$ 8ength of budget periods and control periods should be clearly stated.
d$ A method of accounting and control of e"penditure.
e$ A statement showing the responsibility and of authority given to each manger
for approval of budgets, vouchers and all other forms and documents which
authorize them to spend the money. 'he authority for granting approval must be
clearly stated.
f$ 'he entire process of budgeting programme including the time table for
periodical reporting. A schedule should be drawn for this.
g$ Furpose, specimen form and number of copies to be used for each report and
statement. Budget centers involved should also be stated clearly.
h$ )utline of main budgets and their accounting relationships.
i$ ,"planation of key budgets.
&IBATION O& BUDGET PERIOD:
'he budget period mean the period for which a budget is prepared and employed.
'he budget period will depend upon the type of business and the control aspect.
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Budget period mean the period for which a budge is prepared and employed. 'he
budget period depends upon the nature of the business and the control techni!ues. or
e"ample, in case of seasonal industries #i.e., food or clothing$ the budget period should be a
short one and should cover one season. But in case of industries with heavy capital
e"penditure such as heavy engineering works, the budget period should be long enough to
meet the re!uirements of the business. rom control point of view, the budget period
should be a short one so that the actual results may be compared with the budget each week
end or month end and discussed with and discussed with the Budget committee. 8ong term
budgets should be supplemented by short term budgets to make the budgetary control
successful, as short(terms budgets will helping e"ercising control over day(today
operations. %n short, the budget period should not be too long so that there may be
sufficient time before budget implementation. or most business, annual budget is !uite
common because it compares with the financial accounting year.
'here should be a regular time plan for budget preparation. %t may be on the following
lines.
8ong(term budgets for three to five years should be prepared for e"pansion and
modernization of the undertaking, introduction of new products or new projects and
undertaking heavy advertisement.
Annual budgets coinciding with financial accounting year should be prepared for
the operations activities #i.e., sales, purchases, and production etc, of the business$
or control purposes, short(term budgets(monthly or even weekly budget(should be
prepared for watching progress of actual performance against targets. :hort(term
budgets are prepared to see that actual performance is proceeding according to the
budgets and early corrective action may be taken if there is any pitfall.
'he responsibility for preparation and implementation of the budgets may be fi"ed
as under.
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Budgeta! .onto""e:
Although the chief e"ecutive l finally responsible for the budgetary programme. %t
is better if a large part of the supervisory responsibility is deluged to an official designated
as Budget &ontroller or Budget =irector. :uch a person should have knowledge of the
technical details of the business and report directly to the president or the chief e"ecutive.
Ro""ing 0Continues2 Budget:
'his is a budget which is updated continuously by adding a further period #a
monthS!uarter$ and deducting a corresponding earlier period. Budgeting is a continuous
process under these methods of preparation of budget. )nce the first period elapses, the
forecast for that period is dropped and the forecast for the future period beyond the e"isting
could not be predicted and forecast reliably, this method is useful. 5owever, it is a costly
e"ercise but matched by considerable reduction in operational variances.
Annua" $s Continues ,udgeting s!ste+:
%n some organizations budgets are prepared on annual basis. But annual budgets
may not help the management to have control because variances due to rapidly changing
conditions affect the sales in !uantity and prices, severe rapidly changing conditions affect
the sales in !uantity and prices, severe inflationary conditions e"ist resulting fast increase
in the prices of inputs without reflecting in sales prices immediately and wide range of
products being produced making it not feasible to have precise estimate of levels of activity
for a year.
'he procedure in continuous budgeting will be that a year will be divided into four
!uarters. +onthly budgets for the first !uarter and three !uarterly budgets for the ne"t year
can be prepared. or the first !uarter precise estimates can be drawn up monthly. 'he
budget estimates for the second !uarter may be revised working out separately monthly
estimates on more precise basis for control purposes before the starting of the second
!uarter.
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:imilarly procedure may be followed for third and fourth !uarters. 'his method a time
which need not be in respect of or coincide with the financial year. %t will enable to evolve
a precise plan of action and control of variance functions at least for the immediate !uarter
and a broad tentative one the subse!uent three !uarters on a continues basis.
Pin.i*a" Budget 0"i+iting2 fa.to:
Frincipal budget factor is such an important factor that it would affect all the
functional budgets to a large e"tent. 'he e"tent of its influence must be assessed first in
order to ensure that functional budgets are reasonably capable of fulfillment. 'his is the
factor in the activities of an undertaking which at a particular point in time or over a period
will limit the volume of output. %t is the governing factor which is a major constraint on all
the operational activities of the organization, so this factor is taken into consideration to
determine whether the budgets are capable of attainment. %t is essential to locate the
limiting factor may be any one of the following7
%s there sufficient demand for the productT #customer demand$
<ill a re!uired !uality and !uantity of materials be availableT #availability of raw material$
%s the plant capacity sufficient to cope up with the e"pected salesT #plant capacity$
%s the re!uired type of labor availableT #available of labor$
%s cash position sufficient to finance the e"pected volume of salesT #cash position$
Are there any 9overnment restrictionsT #9overnment restrictions$
or e"ample, a concern has the capacity to produce 3@,@@@ units of particular item per year.
But only 1@, @@@ units can be sold in the market. %n this case, low demand for the product is
the limiting factor. 'herefore, sales budget should be prepared first and other functional
budgets such as production budget, labor budget, plant utilization budget, cash budget etc.
should be prepared in accordance with this case plant capacity is limited. 'herefore,
production budget should be prepared first and other budgets should follow the production
budget.
'hus, the budget relating to limiting factor should be prepared first and the other
budgets should be prepared in the light of that factor. All budgets should be co(coordinated
keeping in view the principal budget factor if the budgetary control is to achieve the desired
results.
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Frincipal budget factor is not static. %t may vary rapidly from time to time due to
internal and e"ternal factors. %t is of temporary nature and in the long run can be overcome
by suitable management taking sales promotion steps as increasing sales staff and
advertising. Flant capacity can be improved by better planning, simplification of product or
e"tension of plant.
DI&&ERENT TYPE% O& BUDGET:
=ifferent types of budgets have been developed keeping in view the different
purposes they serve. Budgets can be classified according to7
'he coverage they encompassN
'he capacity to which they are relatedN
'he conditions on which they are basedN and
'he periods which they cover.
&un.tiona" Budget:
A functional budget is a budget which relates to any of the functions of an
undertaking e.g., sales, production, research and development, cash etc, the following
budgets are generally prepared.

Budget *e*aed ,!
1. :ales Budget including selling and :ales +anager
=istribution &ost Budget
*. Froduction Budget Froduction +anager
1. +aterial Budget Furchase +anager
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2. 8abor and Fersonnel Budget Fersonnel +anager
3. +anufacturing )verheads Froduction +anager
?. Administration &ost Budget inance +anager
A. Flant >tilization Budget Froduction +anager
B. &apital ,"penditure Budget &hief ,"ecutive
C. 4esearch and =evelopment
&ost Budget 4;= +anager
1@. &ash Budget inance +anager
%a"es Budget:
:ales budget is the most important budget and of primary importance. %t forms the
basis on which all the budgets are built up. 'his budget is a forecast of !uantities and
values of sales to be achieved in a budget in a budget period. ,very effort should be made
to ensure that its figures are as accurate as possible because this is usually the starting
budget #sales being limiting factor on which all the other budgets are built up$. 'he sales
+anger should be made directly responsible for the preparation and e"ecution of the
budget. 'he sales budget may be prepared according to products, sales territories, types of
customersN salesmen etc., in the preparation of the sales budget, the sales manager should
take into consideration the following factors7
1. Fast :ales igures and 'rends.
*. :alesmenKs ,stimation.
1. Flant &apacity.
2. Availability of 4aw +aterial and other :upplies.
3. 9eneral 'rade Frospects.
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?. )rders in 5and.
A. :easonal luctuations.
B. inancial Aspect.
C. Ade!uate 4eturn on &apital ,mployed.
1@. &ompetition.
11. +iscellaneous &onsiderations.
Podu.tion Budget:
Froduction budget is a forecast of the total output of the whole organization broken
down into estimates of output of each type of product with a scheduling of operations #by
weeks and months$ to be performed and a forecast of the closing finished stock. 'his
budget may be e"pressed in !uantitative #weight, units etc$ r financial #rupees$ units or
both. 'his budget is prepared after taking into consideration the estimated opening stock,
the estimated sales and the desired closing finished stock of each product. 'he works
manger is responsible for the total production budget and the departmental managers are
responsible for the departmental production budget. %n preparing the production budget, the
following factors are considered.
'he time lag between the production in the factor and sales to the customer should
be considered so as to allow fro the time re!uired or the dispatch of goods from the factory
to the place of the customers.
'he stock of goods to be maintained both at the factoryKs go gown and at he sales centers.
'he level of production needed to meet the sales programme. +onthly production
targets should be fi"ed and it should be seen that production is kept more or less at uniform
level throughout the year. 'he material labor and plant re!uirements should be ascertained
to have the desired production to meet the sales programme.
13
'he sales and the production are inter(dependant because production budget
is governed by the sales budget and the sales budget is largely determined by the
production capacity and by production costs.
Cost of *odu.tion Budget:
After determining the volume of output the cost of procuring the output must be
obtained by preparing a cost of production budget. 'his budget is an estimate of cost of
output planned for a budget period and may be classified into material cost budget, labor
cost budget and overhead budget because cost of production includes material, labor and
overheads.
'ateia"s Budget:
%n drawing up the production budget, one of the first re!uirements to be considered
is material. As we know, materials may be direct or indirect. 'he materials budget deals
with the re!uirements and procurement of direct materials. %ndirect materials are dealt with
under the works overhead budget. 'he budget should be related to the production budget
and the period of the budget should be of short duration because this budget has an
important bearing on the cash budget.
Pu.-ase Budget:
Furchase Budget is mainly dependent on production budget and material
re!uirement budget. 'his budget provides information about the materials to be ac!uired
from the market during the budget period.
1?
Furchase budget should be prepared by the purchase manger by getting relevant
information about capital items, tools, general supplies and direct materials re!uired during
the budget period from other related departments. 8ike other budgets, the purchase budget
has to be approved by the budget committee. After approval it becomes the responsibility
of the purchase officer to see that purchases are made as per the purchase budget.
:ometimes additional purchases which are not covered by the purchase budget are made
under the following circumstances.
%f there is increase in production not anticipated while preparing the purchase
budget and purchase of larger !uantities of materials becomes necessary.
%f accumulation of stock becomes necessary to avoid shortage of materials.
%f overstocking is desired to take advantage of lower prices and there is fear that
price will increase in near future.
'he purchase manger should get additional sanctions from the higher authorities for
making the additional purchases not covered by the purchase budget.
Die.t La,o Budget:
'his budget gives as estimate of the re!uirements of direct labor essential to meet
the production target. 'his budget may be classified into labor 4e!uirements budget and
recruitment budget. 'he labor recruitment budget is developed on the basis of re!uirement
of the production budget given and detailed information regarding he different classes of
labor e.g., fitters, welders, turner, millers, and grinders and drillers etc., re!uired for each
department, their scales of pay and hours to be spent. 'his budget is prepared with a view
too enable the personnel department to carry out programmers of training and transfer and
to find out sources of labour needed so that every effort may be made to remove difficulties
arising in production the available workers in each department, the e"pected changes in the
labour force during the budget period due to the labour turnover. 'his budget gives
information about the personnel specification for the jobs for which workers are to be
recruited, the degree for skill and e"perience re!uired and the rates of pay. <here standard
costing system is applied, the labor cost budget is dev eloped on the basis of standard labor
cost per unit multiplied by the !uantity of anticipated production determined in the
production budget. %f standard costing system is not being followed in the organization, the
information of labour cost may be obtained from past records or estimated cost.
1A
:ometimes another budget known as +anpower budget is prepared. 'his budget
gives the re!uirements of direct and indirect labour necessary to meet the programme set
out in the sales, manufacturing, maintenance, research and development and capital
e"penditure budgets. 'he labor terms are e"pressed of rupee value, number of labour hours,
number and grade of workers etc. this budget makes provision for shift and overtime work
and for the effective training for new workers on labour cost.
'anufa.tuing O<e-eads Budget:
'his budget gives an estimate of the works overhead e"penses to be incurred in a
budget period to achieve the production target. 'he budget includes the cost of indirect
material, indirect labour and indirect works e"penses. 'he budget may be classified into
fi"ed cost, variable cost and semi(variable cost. %t can be broken into departmental
overhead budget to facilitate control. %n preparing the budget, fi"ed works overhead can be
estimated on the basis of past information after taking into consideration the e"pected
changes which may occur during the budget period. Gariable e"penses are estimated on the
basis of the budgeted output because these e"penses are bound to change with the change
in output.
'he &ost Accountant prepares this budget on the basis of figures available in the
manufacturing overhead ledger or the head of the workshop may be asked to give estimates
for the manufacturing e"penses. A good method is to combine the estimates of the &ost
Accountant and the shop e"ecutive.
Ad+inistati<e EC*enses Budget:
'his budget covers the e"penses incurred in framing policies, directing the
organization and controlling the business operations. %n other words, the budget provides as
estimate of the e"penses of the central office and of management salaries. 'he budget can
be prepared with the help of past e"perience and anticipated changes. Budget may be
prepared be prepared for each administration department so that responsibility for
1B
increasing such e"penses. 'his budget covers the e"penses incurred in framing policies,
directing the organization and controlling the business operations. %n other words, the
budget provides an e"ecutive. +uch difficulty is not e"periences in developing such budget
as most of the administration e"penses are of a fi"ed nature. Although fi"ed e"penses
remain constant and are not related to sale volume in the sort run, they are dependent upon
sales in the long run. <ith a small change in output, they do not change. 5owever, if there
is persistent fall in output, administration e"penses will have to be reduced by discharging
the services of some members of the staff and taking other economy measures. )n the
other hand, with persistent increase in output or business activity, administration e"penses
will increase but they may lag behind business activity.
Budgeted In.o+e %tate+ent:
A budgeted income statement summarizes all the individual budges i.e., sales
budget, cost of goods sold budget, selling budget, and administrative sales budget. 'his
budget determines income before ta"es. %f the ta" rate is available net income after ta"es
can also be computed.
%e""ing and Disti,ution Costs Budget:
'his budget is the forecast of the cost selling and distribution for budget
period and is clearly related to the sale budget. All e"penses related to selling and
distributions of the various products as indicated in the sales budget are included in it.
'hese e"penses are based on the volume of sales set in the sales budget and budget and
budgets are prepared for each item of selling and distribution overhead. 8ong term
e"penses.
As advertisement are spread over more than one period. :elling and distribution
overheads are divided into fi"ed and variable category with reference to volume of sales.
:eparate budgets are prepared for variable and fi"ed items of selling and distribution
overheads. &ertain items of selling and distribution costs as cost of transport department
are included in the departmental production cost budget from control point of view rather
that including in selling and distribution costs budget.
1C
P"ant Uti"iAation Budget:
'his budget lays down the re!uirements of plant capacity to carry out the
production as per the production programme. 'his budget is terms of convenient physical
units as weight or number of products or working hours. 'he main functions of this budget
are7
%t will show the machine load in each department during the
Budget period.
%t will indicate the overloading on some departments, machine or group of machine
and alternative courses of actions as working overtime, off loading, procurement or
e"pansion of plants, sub(contracting etc., can be taken.
%dle capacity in some departments may be utilized by making efforts to increase the
demand for the products by providing after sale service, conducting advertisement
campaign, reducing prices, introducing lucky prize coupons, recruiting efficient
sales staff etc.
Ca*ita" EC*enditue Budget:
'he capital e"penditure budget gives an estimate of the amount of capital that may
be needed for ac!uiring the assets re!uired for fulfilling production re!uirements a
specified in the production budget. 'he budget is prepared after taking into consideration in
the available productive capacities, probable reallocation of the e"isting assets such as plant
and e!uipment budget, building budget etc. 'he capital e"penditure budget is an important
budget proving for ac!uisition of assets, necessitated by the following factors7
RE%EARCH AND DE$ELOP'ENT CO%T BUDGET:
<hile developing research and development cost budget, it should be clear in mind
that work relating to research and development is different from that relating to the
manufacturing function. +anufacturing function gives !uicker results than research and
development which may go on for several years. 'herefore, these budgets are established
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on a long term basisN say for 3 to 1@ years which can be further subdivided into short(term
budgets on annual basis. As a rule research workers are less cost consciousN so they are not
susceptible to strict control. A research and development budget is prepared taking into
consideration the research projects in hand and the new research projects in hand and the
new search and development projects to be taken up. 'hus this budget provides an
estimate of the e"penditure to be incurred on research and development during the budget
period.
After fi"ation of the research and development cost budget, the research e"ecutive
fi"es priorities for the various research and development projects and submits research and
development project authorization forms to the budget committee. 'he projects are finally
approved by the senior e"ecutive. Before giving the approval, the e"penditure on research
and development is matched against the benefits likely to be availed of from the new
projectN after the approval of the budget, a close watch is kept on the e"penditure so that it
may not e"ceed budget provisions. %t is also seen that e"tent of progress made is
commensurate with the e"penditure incurred.
CA%H 0&INANCIAL2 BUDGET:
'he cash budget can be prepared by any of the following method7
1. 4eceipts and payments method
*. 'he adjusted profit and loss method
1. 'he balance sheet method
1. 4eceipts and payments method7 %n case of this method the cash receipts from
various sources and the cash payments to various agencies are estimated. %n the
opening balance of cash, estimated cash receipts are added and from the total of
estimated cash payments are deducted to find out of the closing balance.
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*. 'he adjusted profit and loss method7 %n case of this method the cash budget is
prepared n the basis of opening cash and bank balance of the various assets an
liabilities.
1. 'he balance sheet method7 <ith the help of budget balances at end e"cept cash and
bank balances, a budgeted balance sheet can be prepared and the balancing figure
would be the estimated closing cashSbank balance.
'hus under this method, closing balances, other than cashSbank will have to be found out
first to be put in the budget balance sheet. 'his can be done by adjusting the anticipated.
'aste Budget 0&ina"iAed Pofit P"an2:
'he +aster Budget is consolidated summary of the various functional budgets. %t
has been defined as -a summary of the budget schedules in capsule form made for the
purpose of presenting, in one report, the highlights of the budget forecast/. 'he definition
of this budget given by the &hartered %nstitute of +anagement Accountant, ,ngland, is as
follows7
-'hus summary budget incorporating its components functional budgets and which
are finally approved and employed/
'he master budget is prepared by the budget committee on the basis of co(
coordinated functional budgets and becomes the target for the company during the budget
period when it is finally approved by the committee. 'his budget summaries functional
budget to produce a budgeted Frofit and 8oss Account and a Budget Balance :heet as at
the end of the budget period.
&iCed Budget:
'his budget is drawn for one level of activity and one set of conditions. %t has been
defined as a budget which is designed to remain unchanged irrespective of the volume of
2*
output or turnover attained. %t is rigid budget and is drawn on the assumption that there
will be no change in the budgeted level of activity. A fi"ed budget will, therefore, be useful
only when the actual level of activity corresponds to the budgeted level of activity. A
master budget tailored to a single output level of #say$ *@,@@@ units of sales is a typical
e"ample of a fi"ed budget. But in practice, the level of activity and set conditions will
change as a result of internal limitations and e"ternal factors like changes in demand and
price, shortage of materials and power, acute competition etc. %t is hardly of any use as a
mechanism of budgetary control because it does not make any distinction between fi"ed,
variable and semi(variable costs and provides for no adjustment in the budget fi"ed as
result of change in cost due to change in level of activity. %t is also not helpful at all in the
fi"ation of price and submission of tenders.
&"eCi,"e Budget:
'he &hartered %nstitute of +anagement Accountants, defines a fle"ible budget also
called sliding scale budget as a budget which, by recognizing the difference in behavior
between field an d variable costs in relation to fluctuations in output, turnover, or other
variable factors such a number of employees, is designed to change appropriately with such
fluctuations. 'his, a fle"ible budget gives different budgeted costs for different levels of
activity. A fle"ible budget making an intelligent classification of all e"penses between
fi"ed, semi(variable and variable because the usefulness of such a budget depend upon the
accuracy with which the e"penses can be classified. :uch a budget is prescribed in the
following cases.

<here the level of activity during the year varies from period, either due to
the seasonal nature of the industry or to variation in demand.
21
<here the business is a new one and it is difficult to foresee the demand.
<here the undertaking is suffering from shortage of a factor of production
such as materials, labour, plant, capacity etc. 'he level of activity depends
upon the availability of such a factor of production.
<here an industry is influenced by changes in fashion.
<here there are general changes in sales.
<here the business units keep on introducing new products or make
changes in the design of its products fre!uently.
<here the industries are engaged in make to order business like
shipbuilding.
Basi. Budget:
A Basic budget has been defined as a budget which is prepared for use unaltered
over a long period of time. 'his does not take into consideration current conditions and can
be attainable under standard conditions.
Cuent Budget:
A &urrent budget can be defined a budget which is related to the current conditions
and is prepared for use over a short period of time. 'his budget is more useful than a basic
budget, as a target of lays down will be corrected to current conditions.
Long?Te+ Budget:
22
A 8ong(term budget can be defined as a budget which is prepared for periods
longer than a year. 'hese budgets help in business forecasting and forward planning.
&apital ,"penditure Budget and 4esearch and =evelopment Budget are e"amples of long(
term budgets.
%-ot? Te+ Budget:
'his budget is defined as a budget which is prepared for period less than year and is
very useful to lower levels of management for control purposes. :uch budgets are prepared
for those activities the trend in which is difficult to foresee over longer periods. &ash
budget and material budget are e"amples of short term budget.
Pefo+an.e Budget:
Ferformance Budgeting has its origin in >.:.A. After :econd <orld <ar it tries to
rectify some of the shortcoming in the traditional budget. %n the traditional budget amount
are earmarked for the objects of e"penditures such as salaries, travel, office e"penses, grant
in aid etc. %n such system of budgeting the money concept was given more prominence i.e.
estimating or projecting rupee value for the various accounting heads or classification of
revenue and cost. :uch system of budgeting was more popularly used in government
department and many business enterprises. But is such system of budgeting control of
performance in terms of physical units or the related costs cannot be achieved.
Ferformance oriented budgets are established in such a manner that each item of
e"penditure related to a specific responsibility centre is closely linked with the performance
of that centre. 'he basic issue involved in the fi"ation of performance budgets is that of
developing work programmers and performance e"pectation by assigned responsibility,
necessary for the attainment of goals and objectives of the enterprise, it involves
establishment of well defined centers of responsibilities, establishment for each
responsibility centre(a programmed of target performance e in physical units, forecasting
the amount of e"penditure re!uired to meet the physic al plan laid down and evaluation of
performance.
Deo Based Budgets:
23
'his budge is the preparation of budget starting from Jero or from a clean state. As
a new techni!ue it was proposed by Fatter Feal of 'e"as %nstruments %nc., >.:.A. 'his
techni!ue was introduced in the budgeting in the state of 9eorgia by +r. 6immy &arter who
was then the 9overnment of that state. JBB was tried in federal budgeting as a means of
controlling state e"penditures.

'he use of zero(based budgeting as a managerial tool has become increasingly
popular since the early 1CA@Ks %t is steadily gaining acceptance e in the business world
because it is providing it utility as a tool integrating the managerial function of planning
and control. JBB is not based on the incremental approach and previous yearKs figures are
not adopted as a base. 4ather, zero is taken as a base aw the name goes. 'aking zero as a
base, a budget is developed on the basis of likely activities for the future period. %n JBB,
by declining the budget from the past, the past mistakes are not repeated. unds re!uired
for any for the ne"t budget period should be obtained by presenting a convincing case.
unds will not be available as a matter of course.
AD$ANTAGE% O& BUDGETARY CONTROL:
2?
'he most important advantage of a budgetary control is to enable management to
conduct business in the most efficient manner because budgets are prepared to get the
effective utilization of resources and the realization of objectives as efficiently.
%t lies down as objective for the business as a whole. ,ven though a monetary
reward is not offered the budget becomes a game a goal to achieve or a target to shoot at
and hence it is more likely to be achieved or hit that if there was no predetermined goal or
target. 'he budget is an impersonal policeman that maintains ordered effort and brings
about efficiency in result. %t ensures effective utilization of men, materials, machines and
money because production is planned according to the availability of these items.
,veryone working in the concern knows what e"actly to do because budgetary
control laid emphasis on the staff organization. %t ensures that individual responsibilities
are clearly defined and that the re!uired authority commensurate with the responsibility is
delegated so that buck passing ay is prevented when the budgeted results are not achieved.
Budgetary control takes the help of different levels of management in the preparations of
the budget. Budget finally approved represents the judgment of the entire organization and
not merely that of an individual or a group of individuals. 'hus, it ensures team work.
+anagement by e"ception is possible because the comparison of actual and budgeted
results points out weak spots so that remedial action is taken against weak spots which are
not in conformity with the budgeted performance.
Budgetary control creates conditions for setting up a system of standard costing.
%t is helpful in reviewing current trends in the business and in determining further
policy of the business because current and future trends are studied in the preparation of the
budget.


DI%AD$ANTAGE% O& A BUDGET:
2A
<hile budgets may be essential part of activity they do have number of disadvantages,
particularly in perception terms.
Budgets can be seen pressure devices imposed by management, thus resulting in7
a$ bad labor relations
b$ %naccurate record(keeping.
=epartmental conflict arises due to7
a$ dispute over resources allocation
b$ =epartmental blaming each other if targets are not attained. %t is difficult to reconcile
personalSindividual and corporate goals. <aste may arise as managers adopt the view, -we
had better sped it or we will lose it/. 'his is often coupled with -empire building/ in order
to enhance the prestige of department. 4esponsibility versus controlling, i.e. some costs
are under the influence of more than one person, eg. Fower costs.
2B
CHAPTER 8
DATA ANALY%I%
/
INTERPRETATION
2C
CO%T O& PRODUCTION BUDGET 0)336?)3372
PARTICULAR% BE RE Esti+ate fo a.tua"
Out*ut
A.tua"s $aian.e Eof
<o*
:ales 1*@@@ 1*@@@ 1@21@ 13A@#adv$
Galue of production 111A* 1@A3@ CA@1 1@2C#adv$
&ost of production
4aw materials 1A1@ 2@*B #CA@1.1@A3@$U 2@*B
1?13
133? AC#fav$ 1A.2
A
1?.??
&onsumables A1@ ?2@ #CA@1.1@A3@$U?2@ 3AB 2C* B?#fav$ 3.C3 3.@A
Fower A1A ?CA #CA@1.1@A3@$U?CA ?*C 31A C*#fav$ ?.2B 3.32
uel C2? ??? #CA@1.1@A3@$U??? ?@1 23? 123#fav$ ?.* 2.A
4epairs ;
+aintenance
13@ 13@ #CA@1.1@A3@$U13@ 11? 1?A 31#adv$ 1.*? 1.AB
)ff loading ?@1 ??B@ #CA@1.1@A3@$U?B@ ?12 ?3@ 1?#adv$ ?.11 ?.A
'otal variable cost A@3? A@?1 4:5) ?@3B 112#fav$
:alaries ; <ages 11B* 1@CC 1@C1 ?#fav$
)ther e"penses
actory ,"penses A* 3? AA *1#adv$
Admin ; :ellingKs 13B 1AA *B1 C?#fav$
=epreciation 23@ 1@@ 1A3 A3#adv$
4;= 1@1 B1 @ B1#fav$
Amortization 1@ 3 1@ 3#adv$
%nterest *@ *3 2 *1#fav$
'otal fi"ed cost 21C3 1C23 1B2@ 1@3#fav$
'otal &ost of Frod 11*31 11@@? CBCB 11@B#fav$
)perating profit (AC (*3? (1C? ?@#fav$
&apacity utilization AAQ C?Q A2Q **Q#adv$
:ales !uantity #tones$ *1@B *?11 *@1A 3C2#adv$
IN$ENTORY BUDGET 0)336?)3372
3@

0Rs= In LaF-s2
ARTPCULAR% BE 4, ACTUAL% $ARIANCE
4aw materials 11@@ B@@ 11*3 1*3#adv$
&onsumables A@@ ?@@ ?*3 *3#adv$
:pares 2*3 13@ *BA ?1#fav$
%nternally generated 33@ B@@ 1@B3 *B3#adv$
<ork in progress 1*11 *C12 12*3 2C1#adv$
inished goods 1@ 1@ 1*2 112#adv$
'otal inventory ?1C? 32C2 ??A1 11AA#adv$
DETAIL% O& %ALARIE% AND BENE&IT% 0)336?)3372
31
0Rs= In LaF-s2
PARTICULAR% BE RE ACTUAL% $ARIANCE
:alaries ; Allowances *@2A 1CC* *@32 ?*#adv$
8eave encashment C1 1*3 112 C#Adv$
&omp )ff C@ A* *A 22#fav$
%ncentive Bonus 1@@ 13 BA 3*#adv$
:tatutory Bonus 12 @ @ @
:tipend to 'rainees 13 13 11 *#fav$
F#%ncl. %nsp.$ *1? *@3 **3 *@#Adv$
9ratuity 1?1 1B? CA BC#fav$
G4: 32 112 113 *1#adv$
+isc 3 A 2 1#fav$
*B11 *A31 *AA? *3#adv$
<,8A4,
,VF,0:,:
&anteen ,"penses ?3 3@ 2A 1#fav$
#8ess 4eceipts$ @ (1@ (1? ?#fav$
5ealth &are C@ C3 1@@ 3#adv$
amily <elfare ? 3 3.21 @.21#adv$
8iveries ? 1* 12.31 *.31#adv$
8'& 1A 11 1.2* C.3B#fav$
'ransport C1 ?@ 33 3#fav$
8ess 4eceipts$ (? (1.3 (?.*B @.*B#fav$
&onv. Allowance *B 13 22 C#adv$
&hildren ,ducation
Allowance
1@ 1* 1*.1C @.1C#adv$
:taff <elfare ? B @.@3 A.C3#fav$
%nt. :ubsidy on *? *3 1B A#fav$
5ouse 8oans
'ownship ,"penses ** 1B 1A 1#fav$
8ess 4eceipts$ (1 (1 (*.2A @.31#adv$
'ownship ,"penses *C 11 *3 ?#adv$
:chool
TOTAL @EL&ARE :67 :85=9 :15=35 )60fa<2
GRAND TOTAL :)3) :376=9 :37:=35 :0fa<2
DETAIL% O& OTHER EBPEN%E% 0)336?)3372
3*
PARTICULAR% BE RE ACTUAL% $ARIANCE
&ACTORY EBP 0A2
<ater *A 1@ 11 *1#Adv$
4ates ; 'a"es 1 1 1.3A @.3A#Adv$
%nsurance 13 *B ** ?#fav$
Amortizing 'ools 1 @.A3 @.21 @.1*#fav$
+iscellaneous 13 12 1B 2#adv$
B1 33.A3 AA *1#Adv$
AD'N= EBP 0B2
4ent ; service charge 1.3 1* 1* *#fav$
Fostage 'elephone ;
'ele"
21 1@ 1*.3 *.3@#fav$
Frinting ; :tationery 13 *@ 1? 2#fav$
'ravel ,"penses 2@ ?@ 1? *2#fav$
Bank charges ?@ 1@ 1A 11#fav$
Advertisement C 1? 1@ ?#fav$
Audit ees @.2* @.B2 1.A* @.BB#adv$
8egal ,"p *.A3 *.3 @.AA 1.A1#fav$
&onveyance charges B 1@ 11.1? 1.1?#adv$
Books ; Feriodicals 2.3 1 *.1* @.BB#fav$
+embership ; seminars
fees etc.
?.A3 A3 A.C* ?A.@B#fav$
&ommittee meetings ;
,ntertainment e"p
2 1.3 1.3C @.@C#adv$
5ostel ; 9uest 5ouse 2.3 ?.3 3.3 1#fav$
8ess %ncome (1.*3 (1.*3 (1.13 @.1#fav$
&onsultancy e"p 3.3 1 @.11 @.?A#fav$
+isc 3*.3 11A.3 A@.3B 2A#fav$
*3B.1A 1B?.3C **3.B2
1?1#fav$
%ELLING EBP 0C2
:elling Agency com 1 2 1 1#fav$
Fublicity ,"p A.3 A 1@ 1#adv$
,"port Fromotion ,"p A.3 * @ *#fav$
+isc *3 3 A.B1 *.B1#adv$
21 1B 1B.B1 1#adv$
CHARGED O&&( 0D2
<4%'',0 );F4)
+ise ?@ 2@ 2@.13 @.13#adv$
Tota" of AGBGCGD 88)=15 933=:8 :41=6) 1:6=9)0fa<2
REA%ON% &OR $ARIANCE% &OR THE YEAR )336?)337
31
'he performance in respect of both Gop and sales was lower than the targets and is mainly
because of the receipts of most orders at the fag end of the financial year and delays in
import of critical raw materials from 4ussia.
A. 4aw materials7 =ue to continued efforts by the organization to overcome the
problems arises due to imposition of restrictions on supply of materials and as a
result procurement of this material at higher prices and increased utilization of
internally generated scrap has resulted cost of 4aw material consumption.
B. 4epairs and +aintenance7 Because of the aging of the machinery and e!uipment,
repairs and maintenance jobs are increasing.
&. &onsumables7 By improving the life of the furnace lining and recondition of used
cast iron moulds the cost of consumables has come down over the revised
estimates.
=. :alaries and <ages7 'he e"penditure on incentives bonus, G4:, F has increased in
spite of theseN there was nominal variance between actuals and 4, due to controls
e"ercised on other e"penses like 8'&, &omp off etc from time to time.
,. Administrative and :elling e"penses7 ,ven though security e"penses were increased
after :eptember 11
th
attacks, the reduction in administration e"penses was mainly
due to less e"penditure incurred on rent services hares, printing and stationary,
travel e"penses, etc. 'here is a nominal increase in selling e"penses as compared to
estimates due to increased publicity e"penses.
. %nventory7 As most of the orders were received at the end of the financial year, the
organization was not able to e"ecute the orders in time and <%F has increased over
32
estimates. 'he increase in finished goods inventory indicates that there is a delivery
of goods to the customers.
,ven though the sales turnover was less than the estimate, the organization
e"ercised control over e"pense and conse!uently the cost of production was less
than the estimates and as a result the operating loss was less than the estimated.
9. 9.4;=7 'he e"penditure on 4;= was less than the estimated e"penditure
indicating that the organization has deferred has the activities to the re!uired level.
CO%T O& PRODUCTION BUDGET 0)337?)3132
33
PARTICULAR% BE RE Esti+ate fo a.tua"
out*ut
A.tua"s $aian.e Eof
<o*
:ales 11@@@ 1*@@@ C13* *B2B#adv$
Galue of production 1*@3@ 1@A@@ B2C? **@2#adv$
&ost of production
4aw materials 22?@ 1??3 #B2C?.1@A@@$U1??3
*C1@
*3B* 1*B#fav$ 12.*3 1@.1C
&onsumbles A1@ ?1@ #B2C?.1@A@@$U?1@ 3@@ 31* 1*#adv$ 3.BB ?.@*
Fower A1* ?@@ #B2C?.1@A@@$U?@@ 2A? ?** 12?#adv$ 3.?A A.1*
uel A3A 3?@ #B2C?.1@A@@$U3?@ 223 333 11@#adv$ 3.*1 ?.31
4eparirs ; +aintanc 2@@ 1A3 #B2C?.1@A@@$U1A3 *CB 113 1A#adv$ 1.3 1.C2
)ff loading A13 B3@ #B2C?.1@A@@$UB3@ ?A3 A?1 BB#adv$ A.C2 B.CB
'otal variable cost AAC2 ??B@ 31@2 31?C ?3#adv$
:aleries ; <ages 1*3@ 11@C 11AC 11@#fav$
)ther e"penses
actory ,"penses ?? B* A1 C#fav$
Addmin ; :ellings 1B3 1A2 1AB 2#adv$
=epereciation 11@ *3@ *@1 2A#fav$
4;= 1*A 1*3 @ 1*3#fav$
Amortisation 3 1@ 1@ (
%nterest 11@ *3 1? C#fav$
'otal fi"ed cost 2*A1 21A3 1B3C 11A#fav$
'otal cost of prod 1*@?A 1@B3? C**B 1?*B#fav$
)perating profit (1B (13? (A11 3AA#adv$
&apacity utilization ABQ C?Q 33Q 21#adv$
:ales !uantity #tones$ *11A *?1? 12BC 11*A#adv$
IN$ENTORY BUDGET 0)337?)3132

3?

0Rs= In LaF-s2
PARTICULAR% BE 4, ACTUAL% $ARIANCE
4aw materials 1@@@ C@@ CB3 B3#adv$
&onsumables ?3@ ?@@ 311 ?A#fav$
:pares 2*3 1@@ *AB **#fav$
%nternally generated A3@ B@@ 111C 11C#adv$
<ork in progress 11B2 1**3 12C* *?A#adv$
inished goods 1@ 3@ *3? *@?#adv$
'otal inventory ?@1C 3BA3 ??B1 B@B#adv$
3A
DETAIL% O& %ALARIE% AND BENE&IT% 0)337?)3132
#4s. %n 8akhs$
PARTICULAR% BE RE ACTUAL% $ARIANCE
:alaries ; Allowance *1B1.*1 *1BB.?3 *11C.@2 2C.?1
8eave encashment C1.C3 11@.1C C3.3 12.BC
&omp )ff AA 2@ *C.13 1@.?3
%ncentive Bonus 2@ C@ 3C.21 1@.3C
:tatutory Bonus @ @ @.21 @.21
:tipend to 'rainees 13 13 C.1C 3.11
F#%ncl %nsp$ **1.1B *1A.A1 *1?.32 @.1C
9ratuity 1*1.21 1@@ 1@?.1A ?.1A
G4: 1@1.B3 1@C.AB 11.BA *.@C
+isc B.* A.13 1.? 1.33
*B??.@* *BAB.A *AA1.1 1@A.1B
<,8A4,
,VF,0:,:
&anteen ,"penses 33 3A 33.** 1.AB
#8ess 4eceipts$
5ealth &are C3 11@ 11*.?2 *.?2
amily <elfare ? ? ?.@C @.@C
8iveries 13 *C *?.1 *.C
8'& @ A@ B1.@1 11.@1
'ransport ?? 3@ 1C.2A 1@.31
8ess 4eceipts$
&onv Allowance 2@ 3@ 2A.11 *.BA
&hildren ,ducat Allowa 12 13 1@.?A
:taff <elfare 1@ 1 1.3C @.3C
%nt :ubsidy on *B *@ 12.?C 3.111
5ouse 8oans
'ownship ,"penses ** 1C.3 12.1* 3.1B
8ess 4eceipts$
'ownship ,"penses ** 1C.3 12.1* 3.1B
TOTAL @EL&ARE 83: 895=9 8:8=11 )8=86
GRAND TOTAL :)47=3) :::4=) :)39=81 1:1=49
3B
DETAIL% O& OTHER EBPEN%E% 0)337?)3132
PARTICULAR% BE RE ACTUAL% $ARIANCE
&ACTORY EBP 0A2
<ater 13 11 *@.3C
12.41(fav)
4ates ; 'a"es 2 1.?@ C.??
6.06 (adv)
%nsurance 11 *3 1*.13 7.15 (adv)
Amortising 'ools 1 @.3@ @.2
0.10 (fav)
+iscellaneous 13 *@ C.C? 10.04 (fav)
?? B*.1@ A*.A? 9.34 (fav)
AD'N= EBP 0D2
4ent ; service charge 1* 1* B.22
3.56 (fav)
Fostage 'elephone ; 'ele" 1B 13 *C.11 5.89 (fav)
Frinting ; :tationery ** *@ *@.BA
0.87 (adv)
'ravel ,"penses ?3 A@ 33.2A 14.53 (fav)
Bank charges 1@ *@ *3.1C
5.19 (adv)
Advertisement 13 12 B.@C
5.91 (fav)
Audit ees @.B2 @.AA @.C1
0.14 (adv)
)ther Audit ( 1.** 1.11 0.09 (fav)
8egal ,"p *.3@ 1.3@ 1.?A 0.17 (adv)
&onveyance charges 1* 12 1*.12 1.66 (fav)
Books ; Feriodicals *.A3 *.A3 *.A1
0.04 (fav)
+embership ; seminars fees etc. B 1A.3@ B.C1 8.59 (fav)
&ommittee meetings ; ,ntertainment e"p 1.A3 ? 1.??
2.34 (fav)
5ostel ; 9uest 5ouse A ? 2.A 1.3 (fav)
8ess %ncome
&onsultancy e"p 1.3@ 1 3.?C 4.69 (adv)
+isc A? ?1 ?1.CB
0.98 (adv)
*C?.12 *B2.A2 *3*.BA 31.87 (fav)
%ELLING EBP 0C2
:elling Agency com 3 1 1.AC 0.79 (adv)
Fublicity ,"p B 13 11.11
3.69 (fav)
,"port Fromotion ,"p 3 * @
2.00 (fav)
+isc A 1@ 1?.12 6.34 (adv)
*3 1@ 11.22 1.44 (adv)
CHARGED O&&(0D2
<4%'',0 );F4)
+iscellaneous ?3 ?@.@C C2.AA 12.?B #adv$
Tota" of AGBGCGD 89)=:8 894=7: 891=68 9=37 0fa<2
REA%ON% &OR $ARIANCE% THE YEAR )337?)313
3C
Galue of production decreased in *@@C(*@1@ by 4s. **.@2 crores as against 4e *@@B(*@@C
due to reduced sales realization of various products. 'he reasons for lesser sales is due to
lack of orders what ever e"ecuted also are of low value in nature of all the production
facilities.
Cost of Podu.tion Budget:
a$ 4aw material7 As the G)F decreased raw material consumption also got
reduced. 4aw materials on account for about 1?.??Q of G)F and efforts are
on to increase the scrap utilization to reduce the ratio of raw materials to
G)F.
b$ &onsumables7 &onsumption of consumables also reduced due to the
reduction in value of production that is reduction in production activities.
'here is a slight increase in consumption of judicious usage of high value
consumables. 5owever efforts are on to contain the consumption.
c$ Fower ; uel7 Fower and fuel re!uirements are usually determined on the
basis of the level of operations in various shops on the various product mi.
'here is an increase in power cost due to upward revision of power charges
by AF:,B. 'he increase in uel cost is mainly due to increase price of fuel in
%nternational markets.
d$ 4epairs ; +aintenance7 5owever, there is no increase in this e"penditure
because of the aging of the machinery and e!uipment, repairs and
maintenance jobs are increasing. 'he major portion of this e"penditure
comprise of spares.
e$ )ff loading e"penses7 >sually off loading of work in resorted to reduce the
cost of production by getting the small works done outside at a cheaper rate
instead of doing internally. =uring the year the e"penses were higher because
of drastic reduction in volume of off loading !uantity.
?@
f$ :alaries and <ages7 4eduction in factory e"penses were increased by 4s.2
lakhs compared to 4e *@@C(*@1@ due to increase in consultancy, printing;
stationery e"penses due to selling agency commission. .
g$ %nventory7 %ncrease in inventory by 4s.B.@B crores. As against 4, *@@C(*@1@
due to low value of production resulting in to lack of bulk orders.
?1
CO%T O& PRODUCTION BUDGET 0)313?)3112
PARTICULAR% BE RE Esti+ate fo
A.tua" Out*ut
A.tua"s $aian.e Eof
<o*
:ales 1*@@@ 1*311 3113 11C?#adv$
Galue of production 1111* 1@1?@ B2C3 **?3#adv$
&ost of production
4aw materials 1??3 *3B* #B2C3.1@A?@$U
*3B* *@1B
*33B 31C#adv$ *1.CC 1@.11
&onsumables ?1@ 31* #B2C3.1@A?@$U31*
2@2
311 1@A#adv$ 2.A3 ?.@1
Fower ?@@ ?*1 #B2C3.1@A?@$U?*1
2C*
A1C **A#adv$ 3.AC B.2?
uel 3?* 333 #B2C3.1@A?@$U333
21B
31A AB#adv$ 3.13 ?.@B
4epairs ;
+aintains
1A@ 113 #B2C3.1@A?@$U113
*?2
1?? 1@1#adv$ 1.1@ 2.1@
)ff loading B2C A?1 #B2C3.1@A?@$U A?1
?@*
12A? B2A#adv$ A.@B 1A.1A
'otal variable cost ??AA 31A@ 2*1B ?12A 1C@C#adv$
:alaries ; <ages 11@C *13* *2*1 ?C#adv$
)ther e"penses 1@@ 1?C 1BC *@#adv$
actory ,"penses ( ( ( (
Admin ; :ellingKs 1A* 1?@ 1AB 1B#adv$
=epreciation *32 *@1 11@ A1#fav$
4;= 1*3 1C 1 1B#fav$
Amortization 1@ 1@ *1 11#adv$
%nterest *3 1? 11 1#fav$
'otal fi"ed cost 21A@ 11*C 1131 *2#adv$
'otal &ost of Frod 11@2A B?CC C3@@ B@1#adv$
)perating profit (AB (*3@ (1C1 3A#adv$
&apacity
utilization
A@Q C?Q A*Q *2Q#adv$
:ales !uantity
#tones$
*@11 1CA3 1@BB BBA#fav$
?*
IN$ENTORY BUDGET 0)313?)3112
0Rs= In LaF-s2
PARTPCULAR% BE 4, ACTUAL% $ARIANCE
4aw materials C3@ C@? C?? ?@#adv$
&onsumables ?@@ 2B3 311 *B#adv$
:pares 13@ *A1 *A1 *#fav$
%nternally generated B@@ 111A 1@3A B@#fav$
<ork in progress 11B2 12C@ *B2B ?2*#fav$
inished goods 1@ *33 11 *22#fav$
'otal inventory 3BC2 ?32? 3??? BB@#fav$
0
500
1000
1500
2000
2500
3000
3500
Inventory
BE RE ACTUAL
Year ()313?112
Inventory Budget ()313?112
Raw matera!"
C#$"%ma&!e"
'(are"
)$ter$a!!* +e$erated
,#r- $ (r#+re""
.$"/ed +##d"
?1
DETAIL% O& OTHER EBPEN%E% 0)313?)3112
PARTICULAR% BE RE ACTUAL% $ARIANCE
&ACTORY EBP 0A2
<ater *@.3C *1 1* 11 #adv$
4ates ; 'a"es C.? 1@ *2 12 #adv$
%nsurance 1* 1*.13 11.@B @.C1 #adv$
Amortising 'ools @.2 @.2@ @.23 @.3 #adv$
+iscellaneous C.C 1@ 1@.11 @.11 #adv$
A*.2C A1.33 CC.?2 *?.@C #adv$
AD'N= EBP 0B2
4ent ; service charge B2 C 1@ 1 #Adv$
Fostage 'elephone ; 'ele" *C *C *A * #fav$
Frinting ; :tationery *1 *1 *2 1 #Adv$
'ravel ,"penses 33 33 2? C #fav$
Bank charges *@ *3 1C ? #fav$
Advertisement B B.@C 1 3.@C #fav$
Audit ees @.C1 @.A@ @.AC @.@C #adv$
)ther Audits 3 @.@3 1.1@ @.@3 #adv$
8egal ,"p 1.11 1.?A 1.12 @.*3 #adv$
&onveyance charges 1.?? ( ( (
Books ; Feriodicals *.A *.AA 1 @.*1 #adv$
+embership ; seminars fees etc. C 1@ 1@.1 @.@1 #adv$
&ommittee meetings ; ,ntertainment
e"p
2 3 3.1 @.@1 #adv$
5ostel ; 9uest 5ouse 3 2 ? * #Adv$
8ess %ncome
&onsultancy e"p ? ?.1 A 1.1 #adv$
+isc ?2 1?.11 A.3? B.AA #fav$
11?.2 1C1.A1 1A@.AC **.C* #fav$
%ELLING EBP 0C2
:elling Agency com 1.AC 1.AC 1.2C @.1 #fav$
Fublicity ,"p 13 11.11 B.3* *.AC #fav$
,"port Fromotion ,"p * @ @ @
+isc 1@ 1?.11 A.3? B.AA #fav$
1@.AC 11.21 1C.3A 11.B? #fav$
CHARGED O&&( 0D2
<4%'',0 );F4)
+ise C2.AA 11.?C 11.A? *@.@A #adv$
Tota" AGBGCGD 312.23 11*.1B 1*1.A? 11.1B #adv$
?2
DETAIL% O& %ALARIE% AND BENE&IT% 0)313?)3112
#4s. %n 8akhs$
PARTICULAR% BE RE ACTUAL% $ARIANCE
:alaries ; Allowances *11C *13B *2*1 ?C#adv$
8eave encashment 111 C? BC A#fav$
&omp )ff *C *A *3 *#fav$
%ncentive Bonus @ @.21 @ @.21#adv$
:tatutory Bonus 13 C.1C 11 1.B1#fav$
:tipend to 'rainees *1A *1A **C 1*#adv$
F#%ncl %nsp$ *@@ *1?.31 **B.3 1*.2B#Adv$
9ratuity 1*1.21 111.C3 1@?.1A *@A.1B#fav$
G4: 1@1.B3 1@C.AB 111.BA *.@C#Adv$
+isc B.* A.13 1.? 1.33#fav$
*C2?.2? 1133.@1 1**A.12 1*A.?C$fav$
<,8A4,
,VF,0:,:
&anteen ,"penses 2A 33 3? 1#adv$
#8ess 4eceipts$ #adv$
5ealth &are 1@@ 111 1*A 12#Adv$
amily <elfare 3.21 ? A.1 1.1#adv$
8iveries 12.3 *? *B *#adv$
8'& 1.2* B1.1 B3 1.C#Adv$
'ransport ?? 3@ 1C.2A 1@.31#fav$
8ess 4eceipts$
&onv Allowance 22 1B 21 1#adv$
&hildren ,duc Allowan 11 11 13 2#adv$
:taff <elfare @.@3 2@B 1?2 22#fav$
%nt :ubsidy on 1B 13 1C 2#adv$
5ouse 8oans
'ownship ,"penses 1A 13 *@ 3#adv$
8ess 4eceipts$
'ownship ,"penses *3 *? *C 1#adv$
TOTAL @EL&ARE 847 935=9 873=11 )8=860fa<2
GRAND TOTAL :819=84 :64)=9: :515=89 189=360fa<2
REA%ON% &OR $ARIANCE% &OR THE YEAR )313?)311
?3
'he performance in respect of both G)F and sales was low than the targets and is mainly
because of the receipts of the most orders at the end of the financial year.
A. 4aw +aterials7 =ue to continued efforts by the organizations to overcome the
problems arise due to material at higher prices and increased utilization of
internally generated scrap has resulted in reduced cost of raw material
consumption.
B. 4epairs and +aintenance7 Because of the aging of the machinery and
e!uipment, repairs and maintenance jobs are increasing. 'he major portion of
this e"penditure comprises of spares.
&. )ff(8oading ,"penses7 Besides the regular jobs off loading like machining of
low alloys steels, rolling steels etc. off loading of work in resorted to reduce the
cost of production by getting the small works done outside at cheaper rate, in
order to obtain better yields. =uring the e"penses were higher because of drastic
reduction in volume if off loading !uality.
=. :alaries and <ages7 'he increased e"penditure on salaries and wages because of
increase in F and ,F:. %ncrease sue to payment of gratuity etc. other e"penses
are reduced like leave encashment.
,. Administration ; selling7 'he increases in e"penditure on administration ;
selling were mainly due to increase in printing and stationery e"penses. %ncrease
in administration e"penses was mainly due to increase in administration
miscellaneous including entertainment e"penses 4s.@.1? lakh.
. 4;=7 'he e"penditure on 4;= was more than the estimate which shows that
aggressive 4;= activity was undertaken and more goods were produced as
result of 4;=. during the year 9eosynchronous satellite launch vehicle
#9:8G$. 'he performance of the companyKs maraging steel which goes into
making the rocket motor casing etc.
9. %nventory 8evel7 =ecrease in inventory by *.22 crores as against 4, because of
high value of production resulting in to higher consumption of inventories.
CO%T O& PRODUCTION BUDGET 0)311?)31)2
??
PARTICULAR% BE RE Esti+ate fo
a.tua"
Out*ut
A.tua"s $aian.e Eof
<o*
:ales 111A@ 1*33? 3113 11C?#adv$
Galue of
production
11*3@ 1@2@@ B2C3 **?3#adv$
&ost of production
4aw materials 1?2A *3B@ #B2C3.1@A?@$U
*3B@ *@1B
*333 31C#adv$ *1.CC 1@.11
&onsumables ?1* 313 #B2C3.1@A?@$U313
2@2
311 1@A#adv$ 2.A3 ?.@1
Fower ?1@ ?*3 #B2C3.1@A?@$U?*3
2C*
A1C **A#adv$ 3.AC B.2?
uel 3C@ 33@ #B2C3.1@A?@$U33@
21B
311 AB#adv$ 3.13 ?.@B
4epairs ;
+aintenance
13@ 113 #B2C3.1@A?@$U113 1?? 1@1#adv$ 1.1@ 2.1@
)ff loading B?@ A?1 #B2C3.1@A?@$U A?1 12A2 B2A#adv$ A.@B 1A.1A
'otal variable cost ?A@A 31A1 2*1B ?12A 1C@C#adv$
:alaries ; <ages 113@ *13* *2*1 ?C#adv$
)ther e"penses 13@ 1?C 1BC *@#adv$
actory ,"penses ( ( ( (
Admin ; :ellingKs 1A* 1?@ 1A2 1B#adv$
=epreciation *3@ *@1 111 A1#fav$
4;= 1*@ *@ 1 1B#fav$
Amortization 13 1@ *1 11#adv$
%nterest *@ 1? 11 1#fav$
'otal fi"ed cost 21A@ 11*C 1131 *2#adv$
'otal &ost of Frod 11@2A B?C@ C3@@ B@1#adv$
)perating profit (AB (*3@ (1C1 3A#adv$
&apacity
utilization
A3Q C?Q A*Q *2Q#adv$
:ales !uantity
#tones$
*@1* 1CA3 1@BB BBA#fav$
IN$ENTORY BUDGET 0)311?)31)2
?A
0Rs= In LaF-s2
PARTICULAR% BE 4, ACTUAL% $ARIANCE
4aw materials C1@ C@? 3?? 12@#fav$
&onsumables ?3@ 3B@ 3*1 3A#fav$
:pares *3@ *A@ *11 1C#fav$
%nternally generated ?@@ 111B 1?3A 31C#fav$
<ork in progress 11?2 12CC *B1B ??1#adv$
inished goods 13 *3@ 11@ 12@#fav$
'otal inventory 3?@C ??21 3C*3 A1B#fav$
DETAIL% O& %ALARIE% AND BENE&IT% 0)311?)31)2
0
500
1000
1500
2000
2500
3000
3500
Inventory
BE RE ACTUAL'
Year ()311?)31))
Inventory Budget ()311?)31))
Raw matera!"
C#$"%ma&!e"
'(are"
)$ter$a!!* +e$erated
,#r- $ (r#+re""
.$"/ed +##d"
?B
PARTICULAR% BE RE ACTUAL% $aian.e
:alaries ; *2*1 *?CB *312 1?2#av$
Allowances
8eave encashment BC BC C@ 1#adv$
&omp off *3 12 *@ 12#fav$
%ncentive Bonus @ @.12 @ .12#adv$
:tatutory Bonus 11 1? 12 *#fav$
:tipend to 'rainees **C **1 **@ 1#fav$
Ff#%nd. %nsp.$ **B.3 *?A.@@ *1@.3 1A#fav$
9ratuity 1@?.1A 1@@ 1@C.BC @.C#adv$
G4: 111.BA BA.@@ C@.*1 1.*1#adv$
+isc 1.? 3.?A A.@ *.?A#adv$
:))5=:8 :988=57 ::=19=1) ))7=450fa<2
<,8A4, ,VF,0:,:
&anteen e"penses 3? ?@ ?2 2#adv$
5ealth &are 1*A 13@ 123 3.@@#fav$
amily <elfare A.1 2.3 3.@@ @.3#fav$
8iveries *B *? *1 1.@@#fav$
8'& B3 B@ BC C#adv$
'ransport 1C.2A 23.3@ 21.12 2.1?#fav$
&onv Allowance 21 *3 1@ 3#adv$
&hildren ,ducational 13 1? 1C 1.#adv$
Allowances
:taff <elfare 1?2 21@ 2@2 @.?#fav$
%nt subsidy on 1C 1* 13 1#adv$
5ouse 8oans *@ 1@ *3 3#fav$
'ownship ,"penses *C 1@ 1* *#fav$
TOTAL @EL&ARE 873=11 676=9 9:)=81 15=54
GRAND TOTAL :515=89 888) :685=9: )96=540fa<2
REA%ON% &OR $ARIANCE% &OR THE YEAR )311?)31)
?C
'he increase in sales !uantity and G)F of actual over 4, indicates that sufficient orders
were received, particularly of low value items lime soft iron. 0uclear :teel than those of
high value items like super alloys, heating elements alloys.
)ff(8oading ,"penses7 Besides the regular jobs off loading like
machining of low alloys steels, rolling steels etc. off loading of work in resorted to
reduce the cost of production by getting the small works done outside at cheaper rate,
in order to obtain better yields. =uring the e"penses were higher because of drastic
reduction in volume if off loading !uality.
:alaries and <ages7 'he increased e"penditure on salaries and wages
because of increase in F and ,F:. %ncrease sue to payment of gratuity etc. other
e"penses are reduced like leave encashment.
4;=7 'he e"penditure on 4;= was more than the estimate which
shows that aggressive 4;= activity was undertaken and more goods were produced
as result of 4;=. during the year 9eosynchronous satellite launch vehicle #9:8G$.
'he performance of the companyKs maraging steel which goes into making the rocket
motor casing etc.
%nventory7 As most of the orders were received at the end of the
financial year, the organization was not able to e"ecute the orders in time and <%F
has increased over estimates. 'he increase in finished goods inventory indicates that
there is a delivery of goods to the customers.
,ven though the sales turnover was less than the
estimate, the organization e"ercised control over e"pense and conse!uently the cost
of production was less than the estimates and as a result the operating loss was less
than the estimated.
TOTAL IN$ENTORY BUDGETARY
A@
YEAR% BE RE ACTUAL%
*@@B(@C ?1C? 32C2 ??A1
*@@C(1@ ?@1C 3BA3 ??B1
*@1@(11 3BC2 ?32? 3???
*@11(1* 3?@C ??21 3C*3

Inte*etation:
'he inventory level was increased in *@@B(@C. After that ne"t year the level of
inventory decreased. %ncreasing in inventory as against 4, in *@11(1* due to low value of
production resulting in leaser consumption.
TOTAL %ALE% >UANTITY BUDGET
0
1000
2000
3000
4000
5000
6000
7000
Inventory
2008009 2009010 2010011 2011012
Years
Total Inventory
BE
RE
ACTUAL'
A1
YEAR% BE RE ACTUAL%
*@@B(@C *1@B *?11 *@1A
*@@C(1@ *11A *?1? 12BC
*@1@(11 *@11 1CA3 1@BB
*@11(1* *?11 *3?* *3?1
Inte*etation:
:ales !uantity has been increasing from *@@B(*@@C to *@@C(1@. %n *@1@(11 sales !uantity
has decreased. %n the year *@@B(@C actual was overcome the target. Actuals over 4,
indicates that sufficient orders were received, particularly of low value items like soft iron.
0uclear strolls than those of high value items like supper alloys.
%ALE% BUDGET
0
500
1000
1500
2000
2500
3000
Sales Qty
2008009 2009010 2010011 2011012
Years
Total Sales Quantity Budget
BE
RE
ACTUAL'
A*
Inte*etation:
'aking in to the consideration of 2 years data of sales budget. 'here is increase in the year
*@@C(1@. Actual were low than the revised estimates. 5ence it is not reached to the targets.
<hile estimating the sales budget firm should consider the from the customers
YEAR% BE RE ACTUAL%
*@@B(@C 1*@@@ 1*@@@ 1@21@
*@@C(1@ 11@@@ 1*@@@ C13*
*@1@(11 1*@@@ 1*311 3113
*@11(1* 111A@ 1*33? 3113
0
2000
4000
6000
8000
10000
12000
14000
Sales
2008009 2009010 2010011 2011012
Years
Sales Budget
BE
RE
ACTUAL
'
A1
9 YEAR% AT A GLANCE
Pati.u"as )335?36 )336?37 )337?13 )313?11 )311?1)
1 :ales
'o consumers
=ispatches to
:ub(contractors
C,@A3.C?
*,1B1.3A
*@@C(1@ A,2B?.21
1,?2B.A?
C,3?*.?1
*,C2C.C?
11(173=56
1(7:4=):
) Galue of
Froduction
#including ,=$
11,1B?.3A
*@1@(11
C,13@.*1 11,?21.BB 18(144=5:
: &ash profit .loss
#Before prior
Feriod
Adjustments
and ,"cluding
Amortization of
=4, ; =ep
13C.?*
*@11(1*
#1*.B3$ C@B.?* 1(::9=85
8 0et Frofit #FA'$
Before prior
Feriod
Adjustments
13.12 B.C3 #*1?.@A$ ?C@.13 465=36
9 Galue added A,1A*.?B A,1?@.C3 ?,A?B.?2 C,@B*.BC 7(475=87
4 Galue added for
employee
3.*3 3.32 3.*? A.@? 7(475=87
5 Froductivity for
,mployee
B.12 B.*C A.*A C.@3 13=5)
6 Faid up &apital 11,BBC.BA 11,A12.@@ 11,A12.@@ 11,A12.@@ 1:(5:8
7 &apital
,mployed
11,BBC.BA 12,@C1.AC 11,A1*.@1 11,B*3.32 18(:41=4:
13 0et <orth 11,2*1.1? 11,12B.*1 1,**?.1@ 11,BBB.?3 18(:41=4:
11 &ontribution
'o e"che!uer
*,*A@.B@ *,@*C.@@ 1,B?1.@@ *,@11.@@ )(816=33
A2
1) 0o.of
employees
(,"ecutives
(0on(
,"ecutives
*B3
1,@B1
*3?
1,@1A
*3?
1,@1A
*3?
1,@1A
)49
77:
9
YEAR% AT A GLANCE
Pofit afte TaC

YEAR% PAT
*@@A(@B 13.12
*@@B(@C B.C3
*@@C(1@ *1?.@A
*@1@(11 ?C@.13
*@11(1* ?BA.@B
A3

Inte*etation:
'he FA' level was decreased from *@@A(@B to *@@B(@C After that ne"t year the level of FA'
%ncreased *@@B(@C to *@@C(1@ and *@1@(11 this year it has slightly raised high it is good
period to the organization because seeking high profits but in *@11(1* FA' decreased 1Q
:o here it indicates to good measures that followed in year *@1@(11.
ELE'ENT% O& %UCCE%%&UL BUDGETING PLAN
'he success of the budgeting process is an organization depends on the following
essential elements7
A..uate &oe.asting of Business A.ti<ities:
orecasting is a prere!uisite in a budgeting process. %t is not only the starting point,
but is also critical to the development of an accurate budge. orecasting can be done
regarding activities which are internal and e"ternal to an organization. %nternal activities are
easier to forecast than e"ternal activities such as production forecast. But e"ternal factors
like state than e"ternal activities such as production forecast. But e"ternal factors like state
of and nature of marker conditions, inflation or deflation and its company products are
difficult to predict. Business firms re!uire competent market researchers to forecast
accurately such e"ternal factors.
11
141
421
411
21
2007008
2008009
2009010
2010011
2011012
A?
Coodinating Business A.ti<ities:
Budgeting needs to coordinating all the individual budgets into an integrated plan as
each budget has certain implication for the other budgets. 'here must be coordination
between sales, production purchasing, and personnel budges. Budgets are useful tools in
communicating budgetary organizational activities.
Co++uni.ating t-e Budgets:
'he successes of comprehensive budgeting programmers depend on communication
of individual budgets to the different units in the organization. 'he basic point is that the
preparation of the budget is of on value unless it is known to the person for budget of
communicated clearly, concisely and in an authoritative manner to them.
A..e*tan.e and Coo*eation:
:uccessful budgeting also re!uires that budgets should be accepted by the people
who must e"ecute them. Budgeting should have the active cooperation of the organization
from the top to the bottom. &ooperation for the budget can be achieved in a number of
ways.
Reasona,"e &"eCi,i"it!:
'he budgeting programme should contain reasonable fle"ibility if the situation so
demands. 5owever, it should be noted that too much fle"ibility and too much tightness are
both undesirable. 'oo much fle"ibility will weaken the cost control and the budget will
become inoperative. :imilarly, too much rigidity not permitting reasonable of the budget. %f
conditions have changed making the estimates and budgets inaccurate, the budgets should
be revised, a budget is simply a tool to serve managements needs and not an irrevocable
contract.
Po<ing a &a+e1oF fo E<a"uation:
Budgeting provides a basis to evaluate the performance of different departments. A
comprehensive budget, properly developed, will contain initially organizational goals and
e"pectations and subse!uently can be used as an effective evaluation techni!ue.
AA
%uggestions o Guide"ines fo Pe*aation of good ,udget
irstly, determine the principal budget factor this is also known as the key budget
factor or limiting budget factor and is the factor which will limit the activities of an
undertaking. 'his limits output. ,.g. sales material or labour.
A2 %a"es ,udget7 'his involves a realistic sales forecast.
'his is prepared in units of each product and also in :ales value. +ethods of sales
forecasting include7
:ales force opinions
+arket research
:tatistical +ethods #correlation analysis and e"amination
+athematical models using theses techni!ues consider7
&ompanyKs pricing policy
9eneral economic and political conditions
&hanges in the population
&ompetition
&onsumerKs income and tastes
Advertising and other sales promotion techni!ues
After sales service credits terms offered
B2 Podu.tion Budget7 e"pressed in !uantitative terms only and and is geared to the sales
budget. 'he production managerKs duties include7
Analysis of plant utilization
<ork(in progress budgets
%f re!uirements e"ceed capacity he may7
:ubcontract
Flan for overtime
%ntroduce shift work
5ire or buy additional machinery
C2 Ra1 'ateia"s and *u.-asing ,udget: 'he materials usage budget is in !uantities.
'he materials purchase budget is both !uantitative and financial.
AB
actors influencing A$ and B$ include7
Froduction re!uirements
+an(hours available
<age rates #union agreements$
'he need for incentives
D2 Cas- Budget7 cash plan for a defined period of time it summaries monthly receipts and
payments. 5ence, it highlights monthly surplus and deficits of actual cash. %t main uses are
'o maintain control over a firms cash re!uirements, e.g stock and debtors. 'o enable a firm
to tale precautionary measures and arrange in advance for %nvestment and loan facilities
whenever cash surpluses or deficits arises
'o show the feasibility of management plans in cash terms
'o illustrate financial impact of changes in management policy e.g
&hange of credit terms offer to customers.
4eceipts of cash may come from one the following7
&ash sales
Fayments by debtors
'he sale of fi"ed assets
'he issue of new shares
'he receipt of interest and dividends form investment
Fayments of cash may be for one or more of the following7
Furchase of stocks
Fayments of wages or other e"penses
Furchase of capital items
Fayment of interest, dividends or ta"ation
AC
CHAPTER 9
B@
&INDING%
%UGGE%TTION%
CONCLU%ION%
&INDING%
%nventory budget has been decreased form year to year. %n *@@B(@C it has
??A1 actual and *@11(1* it has been decreased to 3C*C actuals.
%t was observed that sales !uantity budget has been increased from year to
year. %n *@1@(11 it has *@1* and *@11(1* has *?11.
:ales budget has moving on the same way. 'here is a minor change in this
budget. %t said to be satisfactory.
B1
)ther e"penses have also decrease form year to year. 'hese results it is said
to be that the e"penses budget is satisfactory.
CONCLU%ION%
After analyzing the financial position of 89 ,lectronics %ndustries and evaluating
its budgetary control or &apital Budgeting techni!ues in respect of components
analysis.
Garious budgetary policies of 89 ,lectronics were analyzed.
&ost of production, inventory, :alaries details, other e"penses, Budgets variants
analysis was done for five years and reasons for variance were analyzed.
%t was found that inventory budget decreased.
B*
:ales budget increased and also other e"penses budget decreased.
%t is hoped that the interpretations, suggestions and ideas and findings of this study
would support the company in an efficient and better way.

%UGGE%TION%
As the internal resources are not sufficient to take up the major modifications
revamping of the e!uipment covering to the re!uirements of strategic sector, 9overnment
of %ndia must take steps to provide.
B1
As 89 is the manufacturer of electronics and consumer durables alloys in the country,
the most acceptable material for electronics devices world wide. %t should put in more
efforts to capture a sizable market share of consumer durables.
89 ,8,&'4)0%&: continues to be comfortable on the power front with the
availability of surplus power uninterruptedly from its feeder agencies. 5owever, by taking
strategic decisions at appropriate time it could be able to transfer some of its surplus
power, reserved for its future e"pansion and modernization schemes, temporary to another
sister organizations in public sector, thereby avoiding payment for unused power charges
duly safe guarding is re!uirements to avail the same at times it becomes necessary.
or the past few years it is evident that the inventories including the scrap generated
internally is in e"cess of estimates. 'he organization must take steps to utilize the scrap to
bring down inputs costs.
<hile several sectors like =efense and Aeronautics enjoy concessions of R0%8R duty,
power and software sectors from 3Q to *@Q no concessions are available to 89
,8,&'4)0%&: in import of its raw materials. 9overnment should take steps to provide
some relief in this regard.
B2
BIBIBLOGRAPHY
BIBLIOGRAPHY
Cost A..ounting
0Pin.i*"es and Pa.ti.e2 ? %=P= #ain / H=L= Naang
Cost A..ounting ? #a1a-a"a"
Cost A..ounting
B3
0A 'anageia" A..ounting2 ? Hongen( Data( &aste
'anageia" A..ounting ? #a+es #ia+,a"o
'anage+ent Conto" %!ste+s ? Ro,et N= Ant-on!
$i;a! Go<indaa;an
Annua" Re*ots of t-e LG ELECTRONIC% INDIA P$T LTD
@e, %ite:
111="ge"e.toni.s=.o+
111=goog"e=.o+
B?