BUDGETARY CONTROL

BUDGET
A financial and/or quantitative statement, prepared prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given time objective period of statement prepared objective.

PLANNING

Features
Budget period
iod er c p g) ifi tin e c ar Sp (st

Financial figures or not

For an objective

udgetary Control
Is the establishment of budgets relating the responsibilities of executives to the requirement of the policy, and the continuous

Features

tting different kinds of budgets(policy)

Comparison with actual

Accordingly measures are taken

Objectives of Budgetary control

Planning Co-ordination Control

Plannin g Setting up of
objectives

Setting up of organisation to implementthe business p the s at implementing objectives.

Co-ordination
Is the process by which each individual or each section of the concern works in harmony

Different department work with each other

Control

Principles And Rules Helps in controlling.

Decentraliz ation

Increases Production efficiency Waste reduce Control O/H. Ecomomic expenditur e

Standards setting

Advantages of Budgetary Control

FFERENT KINDS OF BUDG

This budget is one of the most difficult budget to prepare. It is the planned sale of quantity and value. It forecast what the company can reasonably expect to sell to its customers during the budget period. The importance of budget arises from the fact that if sales figure is incorrect, then the budget will be

Sales Budget

Productio n Budget
Is the plan of production for the budget period. Its first drawn in qualities of each product and when the remaining budgets have been compiled and cost of production is calculated, then the production cost are translated

RAW MATERIAL BUDGET

These are the estimated qualities of all the raw materials and components needed for production demanded by the production budget.

Helps in :1.Planning purchases. 2.Preparation of purchase budget.

PURCHASE BUDGET
Careful planning of purchase budget offers one of the most significant areas of cost saving in many companies. Needs:1.Quantities of each type of raw material and other items to be purchased.

LABOUR BUDGET
It is classified into direct and indirect. Most of the companies include direct labour, and indirect labour in overheads, but it is a forecast of labour requirements to meet the demand of the company during the budget period. This is linked with production and

CASH BUDGET
Most important and last one to be prepared. It is detailed estimate of cash receipt from all sources and cash payments for all purpose and the resultant cash balance during the budget period.

ASTER BUDGET
When all the above budgets are prepared, they are summarized into what is know as MASTER BUDGET. It is a consolidation of all the functional budget. Two parts:1) Operating budget,(budgeted P&L A/C) 2) Financial budget,(budgeted balance sheet)

it is a summary budget

Zero Base Budgeting (ZBB) By Peter Phyrr (1969)

a planning and budgeting process which requires each manager to justify his entire budget request in detail from scratch.

Features of Zero Based Budgeting(Z Budgeting(

1) All budget, new or old are proposed totally afresh. 2) Amount to be spent on each budget is totally justified. 3)Detailed cost benefit analysis of each budget programme is undertaken. 4)Department objectives are linked to corporate goals. 5)How much is replaced by why. 6)Managers from all levels have to take part in this ZBB and are also accountable too.

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