A

STUDY ON
BUDGET AND BUDGETARY CONTROL
AT
HERITAGE FOODS IND LIMITED
BY
POOJA
H.T.NO: 142218672----
SYNOPSIS FOR THE PROJECT TO BE SUBMITTED FOR THE
AWARD OF THE
DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
By

DEPARTMENT OF BUSINESS MANAGEMENT

CSI INSTITUTE OF PG STUDIES
(Affiliated To Osmania University)
Secunderabad-26.
2018-2020
 INTRODUCTION
Budgeting is essentially concerned with planning and can be broadly illustrated by
comparing with the routine a ship captain follows on each voyage. Before the voyage,
he will plan his route, taking into account such factors as shipping harzards, tides and
possible adverse weather forecast. During the voyage he will check on his plans and
record and unusual conditions. If necessary, he may even have to leviater from his plan
if prevailing circumstances require it. On completion of the voyage he will compare the
conditions he encountered with those he expected and use the experience gained in
planning similar voyages in the future.
Budgets and budgeting control are two accounting techniques, which top management
adopts to achieve its tasks of planning, coordinating, directing and control in an
organsiation. Planning is mainly concerned with the establishment of objectives the
formulation, evaluation and selection of the policies, strategies factics and actions
required to achieve these objectives planning was previously based on historical cost
conventions. This process increased the emergency decision which top management
had to make because historical cost conventions arenot future oriented; they do not aid
planning.
In order to reduce to management emergency decision making processes and thus aid
planning, variable budgets were introduced. This is so because managers want to know
more than they have done currently in relation to last period performance, they also
want to know how they have done currently in relation to their current target
performance.
Control on the order hand follows closely after action has been taken. If is a process
where by actual performance is compared with targeted budgeted performance any
deviations from this target are investigated for an in-depth or positive explanations to be
given. Budgetary control is the technique used for this purpose and when it is combined
with budget, it becomes part of responsibility accounting the aim of budgetary control is
to provide a format basis for monitoring the progress of the organization as whole and of
its components parts, towards the achievement of the objectives specified in the
planning budgets.
Budgets enjoy a wide application. They can be used in our private homes where a civil
servant who earns a monthly income will map out his objectives and plan effectively
 with what he haste achieve these objectives. Both profit-oriented and non-profit
oriented organization apply in all three tiers of government –local, state and federal.
Profit oriented organization use the type of budget that is output and objective oriented
to enabl them know how efficient they have been in managing the resources available to
them. They therefore use the planning programming budgeting system (PPBS)
budgeted expenditure is compared with actual performance achieved. The system is
based, not on traditional organizational structure and divisions, but on programmes
grouping of activities common objectives.
This is in sharp contract with the type of that is used in non-profit seeking organizations
like the local state and federal government agencies. This is the lineitem budgeting
system. This method is the tradition the traditional approach to government allocation;
it is oriented to expenditure and budget relates mainly to the organizations from which
they are prepared not for the purpose for which money is spent.
"The establishment of budgets relating the responsibilities of executives to the
requirements of a policy, and the continuous comparison of actual with budgeted results,
either to secure by individual action the objective of that policy, or to provide a basis for
its revision".
A budget is a quantitative expression of a plan of action relating to the forthcoming
budget period. It represents a written operational plan of management for the budget
period.” A plan expressed in money. It is prepared and approved prior to the budget
period and may show income, expenditure, and the capital to be employed, may be
drawn up showing incremental effects on former budgeted or actual figures, or be
compiled by zero based budgeting”. Budget and Budgetary control. The terms budget
and budgetary control are often used interchangeable to refer to a system of managerial
control. Budgetary control implies the use of a comprehensive system of budgeting to
aid management in carrying out its functions like planning, co-ordination and control.
BUDGET:

According to Institute of Chartered Management Accountants (ICMA) England “A plan

qualified 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”
 Budgetary control methods

a) Budget:

 A formal statement of the financial resources set aside for carrying out specific activities in
a given period of time.
 It helps to co-ordinate the activities of the organization.
 An example would be an advertising budget or sales force budget

b) Budgetary control:

 A control technique whereby actual results are compared with budgets.

 Any differences (variances) are made the responsibility of key individuals who can
either exercise control action or revise the original budgets.

Budgetary control and responsibility centers;

These enable managers to monitor organizational functions.

A responsibility centre can be defined as any functional unit headed by a manager who is
responsible for the activities of that unit.

There are four types of responsibility canters

a) Revenue canters:
Organizational units in which outputs are measured in monetary terms but are not directly
compared to input costs.

b) Expense centre:

Units where inputs are measured in monetary terms but outputs are not.

c) Profit centre:

Where performance is measured by the difference between revenues (outputs) and

expenditure (inputs). Inter-departmental sales areoften made using "transfer
prices".
 d) Investment canters :

Where outputs are compared with the assets employed in producing them, i.e.
ROI.
Advantages of budgeting and budgetary control

There are a number of advantages to budgeting and budgetary control:

 Compels management to think about the future, which is probably the most important
feature of a budgetary planning and control system. Forces management to look
ahead, to set out detailed plans for achieving the targets for each department,
operation and (ideally) each manager, to anticipate and give the organization purpose
and direction.
 Promotes coordination and communication.
 Clearly defines areas of responsibility. Requires managers of budget centre to be
made responsible for the achievement of budget targets for the operations under their
personal control.
 Provides a basis for performance appraisal (variance analysis). A budget is basically a
yardstick against which actual performance is measured and assessed. Control is
provided by comparisons of actual results against budget plan. Departures from
budget can then be investigated and the reasons for the differences can be divided into
controllable and non-controllable factor

1.2 NEED OF THE STUDY

1) To know about the budget and budgetary control of a “HERITAGE FOODS IND
LIMITED.”.
2) To study about the status of a company by different financial budgetary policies in the
year 2014 to 2018.
3) To know about the present scenario of manufacturing companies Investment
estimation those are existed in the market.
4) To analyse about the present impact of budgetary control on the financial position of
the company.
 5) To compare the Past performance to based on future Estimation of the budgetary
control of the techniques.

1.3 SCOPE OF THE STUDY

The scope of the study limited to collecting the data published in the reports of the
company and opinions of the employees of the organization with reference to the objective
stated above and theoretical framework of the data. With a view to suggest solutions to
various problems relating to budget and budgetary control.

1.4 OBJECTIVES OF THE STUDY

1. To provide the material frame work of budget and budgetary control in 2014-18.
2. To describe the profit of the organization as a backdrop for undertaking a study of
budgetary control system.
3. To analyze the budgetary system in practice in HERITAGE FOODS IND
LIMITEDwith particular reference to their objectives and phases of organizational
and re-appropriation.
4. In addition to the analysis of the conventional budgetary system in practice in
HERITAGE FOODS IND LIMITED. The study aims at evaluation and modification
to the current budgetary system with reference to the various types of budgets. The
scope in the formulation of performance budget is also studied.
5. To study the budgeted estimates and accruals of the revenue expenditure and revenue
receipts.
6. To study the variations of the accruals from the budgeted estimates.
7. To study the working of the financial department at HERITAGE FOODS IND
LIMITED.
THE HYPOTHESIS

The research hypothesis aims at finding a positive or negative of budgets and budgetary
control as a tool for effective decision and planningin government ministries and parastatals
in Imo state, the following specific hypothesis based on planning and control process is
tested empirically.
Planning
HO: The budgets are not related to activities with common objectives and so there is no
responsibity accounting.
HI: The budgets are related to activities with common actives and so there is
responsibility accounting.
2. HO: The staff are not commended for operating to the budget and so there is no
motivation.
HI: The staff are commended for operating according to the budget and so there is
motivation.
Control
3. HO: There is no feedback showing how well bedgets are working out at all levels
of the organization structure.
HI: There is feedback showing how well the budgets are working out at all levels of the
organization structure.
4. HO: There is no investigation of variance from the budget.
HI: There is investigation of variance from the budget.
5.3 LIMITATIONS OF THE STUDY

1. The study is purely based on the information provided by the company and the data is
collected from the reports, annual reports, and magazines of the company.
2. Estimates are used as basis for budget plan and estimates are based mostly on
available facts and best managerial judgment
3. Budgetary control cannot reduce the managerial function to a formula. It is only a
managerial.
4. Tool which increase effectiveness of managerial control.
5. The use of budget may be to restricted use of resources. Budgets an often taken as
limits.
6. Efforts may therefore not be made to exceed the performance beyond the budgeted
targets.
7. Frequent changes may be called for in budgets due to first changing industrial climate.
8. In order that a system may be successful, adequate budgets education should be
imparted at least through the formative period. Sufficient training programs should be
arranged to make employees give positive response to budgetary activities.
9. To study is restricted to The HERITAGE FOODS IND LIMITED).
10. To study is restricted to limited period.
RESEARCH METHODOLOGY OF THE STUDY:

The study is both descriptive and analytical in nature. It is a blend of primary data and
secondary data.The primary data has been collected personally by approaching the online
share traders who are engaged in share market. The data are collected with a carefully
prepared questionnaire. The secondary data has been collected from the books, journals and
websites which deal with online share trading.

Source of data

Primary Sources: The primary data was collected through structured unbiased questionnaire
and personal interviews of investors. For this purpose questionnaire included were both open
ended & close ended & multiple-choice questions.

Secondary method: The secondary data collection method includes:

 Websites
 Journals
 Text books
Method Used For Analysis of Study

The methodology used for this purpose is Survey and Questionnaire Method. It is a time
consuming and expensive method and requires more administrative planning and supervision.
It is also subjective to interviewer bias or distortion.

Statistical Tools: MS-excel and pie and bar diagrams are used to analyze the data.
BIBLIOGRAPHY

Books referred:

 Financial Risk Management-

 Investment Management- V.K. Bhalla
 Financial Management: M.Y. Khan & P. K. Jain, Fourth edition, published by TATA
McGraw HILL.
 Financial Management: Prof. Satish Inamdar, published by Symbiosis center for
distance learning, Pune.
 Financial Management; I. M. Pandey, Second edition, published by TATA McGraw
HILL publishing company.
 Financial Management : Prasannachandra
 Management Accounting and control S.N.Maheswari
Web sites
 http://www.heritage.com
 http://www.yahoofinance.com
 http://www.google.com
 http://www.moneycontrol.com
 http://www.google.com
News papers:

 Times line
 Business standards
 mint

Journals & Magazines

 Springer (Dec-15)
 Financial Budget.
 Times of India.
 Financial cornices.