Budgetry Control
BUDGETARY CONTROL
Budget is a plan which is expressed in terms of definite members:
Eg. of a plan – Production has to be increased in the next quarter
Eg. of a budget – Production has to improve by 10000 units from the last quarter to the next quarter.
Definitions:
According to ICMA “budget is a financial & / quantitative statements, prepared & approved prior to a defined period of time of the policy to be pursued during that period for the purpose of attaining a given objective. They may include income, expenditure & the employment of capital”.
Budgetary Control – “It is the process of utilizing the various budgets like production budget, sales budget, etc,. for the purpose of internal control”. This is done with intention of minimizing the wastage & maximizing the efficiency of various departments.
According to ICMA terminology budgetary control as “the establishment of budgets relating the responsibilities of executives to the requirements of the policy & the continuous comparison of actual with the budgeted results either to secure by individual actions the objective of that policy to provide basis for its revision”.
Steps involved in the Budgetary Control Techniques:
1. Fise the objectives clearly.
2. Formulating the necessary plans to ensure that the desired objectives are achieved.
3. Translating the plans into budgets.
4. Relating the responsibilities of executives to the budgets.
5. Continuous comparison of the actual results with that of the budget & the ascertainment of deviations (Positive/negative).
6. Investigating into the deviations & establishing the causes.
7. Presentation of information to the management relating the variances to individual responsibilities.
8. Corrective action of the management to present recurrence of variance
Types of Budget
Based on Functions Based on Rigidity
Master Budget:- It is a budget which summarises all the functional budgets.
According to ICMA, “A master budget is the
Budget is a plan which is expressed in terms of definite members:
Eg. of a plan – Production has to be increased in the next quarter
Eg. of a budget – Production has to improve by 10000 units from the last quarter to the next quarter.
Definitions:
According to ICMA “budget is a financial & / quantitative statements, prepared & approved prior to a defined period of time of the policy to be pursued during that period for the purpose of attaining a given objective. They may include income, expenditure & the employment of capital”.
Budgetary Control – “It is the process of utilizing the various budgets like production budget, sales budget, etc,. for the purpose of internal control”. This is done with intention of minimizing the wastage & maximizing the efficiency of various departments.
According to ICMA terminology budgetary control as “the establishment of budgets relating the responsibilities of executives to the requirements of the policy & the continuous comparison of actual with the budgeted results either to secure by individual actions the objective of that policy to provide basis for its revision”.
Steps involved in the Budgetary Control Techniques:
1. Fise the objectives clearly.
2. Formulating the necessary plans to ensure that the desired objectives are achieved.
3. Translating the plans into budgets.
4. Relating the responsibilities of executives to the budgets.
5. Continuous comparison of the actual results with that of the budget & the ascertainment of deviations (Positive/negative).
6. Investigating into the deviations & establishing the causes.
7. Presentation of information to the management relating the variances to individual responsibilities.
8. Corrective action of the management to present recurrence of variance
Types of Budget
Based on Functions Based on Rigidity
Master Budget:- It is a budget which summarises all the functional budgets.
According to ICMA, “A master budget is the