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Controlling

The control function monitors system to keep things in line and facilitates the integration of activities Control mean several things like 1. To check/verify 2. To regulate 3. To compare with standard 4. To exercise authority 5. To curb/restrain

Importance of Controlling
Facilitates achievement of targets

Facilitates coordination and efficiency


Avoids Deviations Avoids wastages Provides remedial measures Removes weak points Raises employee morale

Steps in Control Process


1.Setting standards/targets
2.Measuring actual performance

3.Comparing actual performance with standard performance and identifying the deviation,if any
4.Introducing suitable corrective measures 5. Taking follow-up action

Budgeting
The term Budget is derived from French word Bougette meaning bag or a pouch. It implies the availability of resources It is plan by which management charts its future course of action for a specified period usually one year Budgeting is a process of formulating financial plans in numerical terms for a specific period

Definition of Budgeting
a plan which has been prepared for all phases of the operations of business for a definite future period of time --Rufus Wixon

Objective of Budgeting
To clarify the programmes

To coordinate activities of various branches


To measure efficiency

To help financing the business


Information about companys financial position

Budget Preparation
1. Sound forecasting 2. Efficient accounting system 3. Adequate cost information 4. Sound business policies 5. Suitable budget period

6. Proper estimation
7. Managerial support 8. Sound organization structure

Variance Analysis
Variance Analysis is tool of budgetary control

It is difference between planned and actual amount incurred


The analysis of budget depend on : Comparison of actual and standard previously set Interpretation of causes of difference The difference is called Variance

Variance Analysis
There are two types of variances:
When actual results are better than expected results ,the variance is called favourable variance When actual results are worse than expected results ,the variance is called unfavourable variance

Types Of Budgets
MASTER BUDGET:
A Master Budget is summary budget which incorporating its component functional budget --Institute Of Cost Works Accountants of India It incorporates all functional budgets such as production, sales, R&D etc It serves as nucleus of all departmental budgets It is often called as blue print of functional budgets

Types Of Budgets
FUNCTIONAL BUDGETS
Functional budget is a budget of income or expenditure appropriate to or responsibility of particular function -- I.C.W.A
It is a budget relating to particular department Types Of Functional Budgets are :

Types Of Budgets
1. Sales Budget : It starts with sales forecasts , which are prepared for each product separately It is nerve centre of the operating budgets It consist of both value and volume It also shows expected selling & distribution expenses and net income likely to be derived from sale of goods of the company

Types Of Budgets
2. Finance Budget: It is a summary of total amount of expected receipts and payment during the budget period It helps to plan for allocation of working capital needs of the enterprise It also helps in making provision for heavy expenditure

It also helps in raising funds through borrowing or other means

Types Of Budgets
3.CASH BUDGET :
It is integral part of finance budget It is a forecast of cash receipt and disbursement against which actual cash flow is measured It also shows excess cash ,thereby making possible planning for investment of surplus

Types Of Budgets
4.MANUFACTURING BUDGET : Manufacturing activity consist of land, labor, machine, building and raw material It is comprehensive budget to determine the manufacturing capacity of the firm It is also useful to prepare production budget

Types Of Budgets
5.CAPITAL EXPENDITURE BUDGET : It reflects managements policy on growth, investment, expansion, production and profits

IT is specifically on plant, machinery, equipment, inventories and other items of capital nature
It forms a part of a long range planning of the firm

6.COST BUDGET
Different cost like distribution costs, R&D costs, advertising costs etc are estimated under different sub budget Sub-budgets are prepared in detail to arrive at comprehensive total cost budget

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