BY JUHI Y PUNMIYA

M.Com ACCUNTANCY
ROLL NO 33

OUTLINE
Cost

control

Meaning
Types

of Budget

of Budget

Budgetary

Control

Objectives

of Budgetary Control

Organization

for Budgetary Control

Advantages

of Budgetary Control

Limitations

of Budgetary Control

Cost control
The

practice of managing and /or reducing

business expenses is termed as Cost Control.

Cost

Control starts with identifying what their

costs and evaluate whether those costs are
reasonable and affordable.
Cost
Control
Budgeting

Standard
costing

Meaning of Budget
When

plans are quantified and monetized they

become Budget.

It

is an estimation of cost.

Budget

is a financial and/or quantitative

interpretation, prior to a defined period of time
of a policy to be pursued during that period for
the purpose of attaining a given objective.

A budget
Planned
Plans

shows the following:

revenues and expenditure.

for assets and liabilities.

Estimates

for cash receipts and payments.

Types of Budget
FUNCTIONAL

BUDGETS:- budget for various

departments and functions of organization such as
sales, production, admin, etc.

MASTER

BUDGET:- summery of all functional

budgets including projected Income Statements
and Balance Sheet.

CASH

BUDGET:- A budget of cash inflows and

outflows.

 CAPITAL

BUDGET:- A budget for investments that

require huge capital outlay over along period of a
time.

GOVERNMENT

BUDGET:- A budget for government

revenue and expenditure.

MISCELLANEOUS

BUDGET:- A budget for special

events Eg. Trade Fair, R and D, Sales promo, etc.

Budgetary Control
Budgetary

Control entails measuring, reporting,

analyzing and giving feedback on budget
performance.

Budgetary

control is implementing budgets and

making managers responsible for implementing it.

Technically

it is defined as the establishment of

budget relating the responsibilities of executives
to the requirement of a policy, and the continuous
comparison of actual with budgeted results,
either to secure by individual action, the
objective that policy or to provide a firm basis of
its revision.

Objectives of Budgetary Control

PLANNING:-

A budget is a plan of policy to be

pursued during the definite period of time to
attain a given objective.

CO-ORDINATION:-

A budgetary control coordinates various activities of the firm.

CONTROL:-

Control consists of action necessary

variations from the budget to the management for
corrective action to fulfil plans and policies.

Organization for Budgetary control

ORGANIZATIONAL

CHART:-

 BUDGET

CENTER:- It is a section of the

organization of an undertaking defined for the
purposes of budgetary control.

BUDGET

OFFICER:- He/she is a senior officer of

accounting staff who controls the budgetary
process.

BUDGET

COMMITTEE:- It comprises of the

managing director, production manager, sales
manager and accountant. The main objective of
the committee is to agree on all departmental
budgets.

 BUDGET

MANUAL:- Contains the purpose of,

procedure for and responsibility of the people
involved in budgeting.

BUDGET

PERIOD:- A budget is always related to a

specific time period.

KEY

FACTOR:- It constraints a limit for the

planned of the organization.

Budgetary Control Report Format

Actual
Turnover
Cost of Sales
Admin
Expenses
Staff Cost
Other Cost
Operating
Profit

Budget

Variance

Comment

Advantages of Budgetary Control

It

facilitates reduction of cost.

Guides

the management in planning and

formulation of policies.

It

helps to the management efficient and

economic production control.

It

guides management in research and

development.

It

ensures economy in working.

It

helps to adopt principles of standard costing.

Limitations of Budgetary Control

Budget

plan is based on estimates and

forecasting.

Uncertainty

about future.

Depends

upon willingness, co-operation and

understanding among executive people.

Lack

of co-operation may lead to inefficient

performance.

The

system does not substitute for management.

It is a mere like a management tool.

It

is a time consuming process.

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