scaling techniques

Managerial control is a systematic effort to set performance standard along with planning targets. There are various techniques of managerial control. All techniques can be classified broadly into two categories. Such as :-
A. Budgetary control techniques
B. Non-budgetary control techniques

Budgetary Control Techniques

The word ‘budget’ is derived from a French word “Bougettee”. The meaning of this word is a leather pouch in which funds are appropriated for meeting anticipated expenses. A budget is a recorded plan of action expressed in quantitative terms. Budgetary control is derived from the concept and use of budgets. According to George R. Terry, “Budgetary” control is a process of comparing the actual results with the corresponding budget data in order to approve accomplishments or to remedy differences by either adjusting the budget estimates or correcting the cause of the difference.

There are generally four steps of modern system of budgetary control. These are mentioned below :-
1) Budget Policy Guidelines :- In an organisation, line managers have to base their expectations on various assumptions in time of preparing budgets. These assumptions are related to economy, political trends, government policies, competitors’ actions, strengths of organisation, basic managerial policies etc. The top management should prepare a common set of budget policy guidelines to be followed by all managers of middle and lower level. Budget Policy Guidelines also lay down the fundamental targets necessary for continuous progress of the business.

2) Preparation of Budgets :- According to nature, activities and size of organisation, different types of budget are prepared. Different departmental heads have to prepare their own budget as per guidelines given by the top management. Thereafter the budget committee would discuss all the budgets and observe that budgets are prepared within the safety margin.

Let us discuss some budgets-
i) Sales budget