Budgetary Control

Budget

A Budget is a financial and/or quantitative

Statement, prepared prior to a defined
period of time, of the policy to be
pursued that period for the purpose
of attaining given Objective

Budgetary Control

Budgetary Control is the establishment

of Budgets relating to the responsibilities
of executives of a policy and the continuous
comparison of the actual with the budgeted
results, either to secure by individual action
the objective of the policy or to provide
basis for its revision

Budgetary Control
Characteristics
Establishment of Budgets
Analysis Of Variation
Taking Remedial Action
Revision Of Budgets

Budgetary Control
OBJECTIVES

Planning

Motivation

Co-ordination

Performance
Evaluation

Communication

Control

Budgetary Control
Preliminaries for Installation
Creating Budget Centre
Accounting Records
Organization Chart
Budget Committee
Budget Manual
Budget Period
Key Factor

Functional Budgets
SALES BUDGET
PRODUCTION BUDGET
SELLING & DISTRIBUTION
ADMINISTRATION
R & DEVELOPMENT BUDGET

PRODUCTION BUDGET

PLANT
UTILISATION

Material

COST OF
PRODUCTION
BUDGET

Labour

Purchase

Overheads

Other Budgets
CASH BUDGET

Capital Expenditure
PERFORMANCE BUDGET
ZERO BASED BUDGET
FIXED-VARIABLE BUDGETS

Key factor (limiting factor

Capacity
Shortage of raw material
Skilled Labour
Working Capital
Government restrictions
LABOUR HOURS
POWER SUPPLIERS

Sales (orders)

Sales Budget

SALES BUDGET

PRODUCTS TERRITORIES
CUSTOMERS
SALESMEN
MONTH .QUARTER

HISTORICAL ANALYSIS REPORTS

BY SALESMEN MARKET
ANALYSIS of BUSINESS
CONDITIONS
SPECIAL CONDITIONS

SALES BUDGET
Period

Product A
Units

Product B

Product C

Total

Amt
Units
Rs.30
P.U.

Amt
Rs.
40
P.U.

Units

Amt Amt
Rs.2 (Rs)
0 P.U

Jan
Feb
March
Total
IQ
IIQ
III Q
IV Q

4,000
4,500
5,000

1.20
1.35
1.50

5,000
6,000
5,000

2.00
2.40
2.00

10,000
8,000
7,000

2.00
1.60
1.40

5.20
5.35
4.90

13,500
12,000
16,000
15,000

4.05
3.60
4.80
4.50

16,000
18,000
20,000
16,000

6.40
7.20
8.20
6.40

25,000
30,000
32,000
28,000

5.00
6.00
6.40
5.60

15.45
16.80
19.20
16.50

Total

56,500

16.95

70,000

28

115000

23

67.95

Sales Budget

Area

Budget
Actual
Product Quantity Price Quantity

North

A
B

10,000
6,000

10
5

11,500
7,000

South

12,000

12,500

East

15,000

10

16,500

West

A
B

8,000
5,000

10
5

9,500
5,250

Area

North

South

East

West

Total

Total

Product

Budget June 30, 05

Budget June 30,04

12,000

10

12,0000

10,000

10

1,00,000

6,500

32,500

6,000

Total

18,500

1,52,500

16,000

3,000

10

30,000

--

13,000

65,000

12,000

Total

16,000

95,000

12,000

17,000

10

1,70,000

15,000

5,000

25,000

--

Total

22,000

9,000

5,500

Total

14,500

41,000

30,000

71,000

Actual June 30,03

Q

11,500

10

1,15,000

30,000

7,000

35,000

1,30,000

18,500

1,50,000

--

--

--

--

60,000

12,500

60,000

12,500

10

1,50,000

16,500

10

1,65,000

--

--

--

--

--

1,50,000

16,500

62,500

62,500

1,95,000

15,000

1,65,000

10

90,000

8,000

10

80,000

9,500

10

95,000

27,500

5,000

25,000

5,250

26,250

1,17,500

13,000

1,05,000

14,750

10

4,10,000

33,000

10

3,30,000

37,500

10

3,75,000

1,50,000

23,000

1,15,000

24,750

1,23,750

5,60,000

56,000

4,45,000

62,250

1,21,250

4,98,750

Production Budgets

PRODUCTION BUDGET
BASED
UPON

Sales
Budget

Production
Stock
Capacity Requirements
CLASSIFIED

Manufacturing
Products
Departments

Months

PRODUCTION BUDGET .. JUNE 30,05

Product A
Req. To Fulfill S. Prog.
Forecast Cl. Stock
Fore cast op. stock

Jan :7050

41,000 Feb: 7000

4,000 Mar: 8000
45,000 Apr: 8000
May:8000

3,000
42,000 Jun: 5000

Add For Defectives 2 % 1,050

Quantity for Production
43,050

43,050

PRODUCTION BUDGET FOR THE YEAR

PRODUCTION SALES
(UNITS)

X
Y
Z

CLOSING OPENING
STOCK
STOCK
(UNITS)
(UNITS)

PRODUCTION
BUDGET
(UNITS)
1+2=3

4800
2400
2400

800
400
400

600
300
800

5,000
2,500
2,000

MACHINE UTILIZATION BUDGET

Product Units Cost Centre A

Cost Centre B

HRs. Total
No. of P.U. M. Hrs. MAC.
Req.
X
Y
Z

5,000 20
2,500 200
2,000 30

1,50,000 60
5,00,000 200
60,000 24
7,10,000 284

70
100
20

3,50,000 140
2,50,000 100
40,000 16
6,40,000 256

Production Cost Budgets

PRODUCTION COST BUDGET
PROD M
UCT
A
C
HI
N
E

IT
E
M
S
OF
M
AT

1
2
3
4

1
2

X
Y

1
2
3

1
2

1
2
3

X
Y
Z

Total

MATERIA
L

LABOUR

QT.
RE
Q.
FOR
PRO
DU
CTI
ON

O
P
E
R
A
TI
O
N

R
A
T
E
P.
U.

C
O
S
T

G
R
A
D
E

H
O
U
RS

F.O.H.
HO
USR
LY
RAT
E

C D
C
O EP OS
S T. T
T

T
O
TA
L
C
OS
T

C
OS
T
P.
U.

Products

D. M.a.t.

D. Lab.

D. M. 11
D. M. 21
D. M. 31
DEPT. I
DEPT. II
DEPT. III

O. Variable cost
T. Variable Cost
Fixed Production OH.
DEPT. I (P.H. Rs)
DEPT. II (P. H. 3)
DEPT. III (P.H. 6)
Fixed P. O. H.
Product Cost
A.D. M. @ 20%
S. D. @ 40
Total Cost
Profit Selling price sales Qt.
A 15 Lakh /200
B. 10.80/216
C. 16.80 / 280

A
Rs. P.
Unit

B
Rs. P.
Unit

C
Rs. P.
Unit

10
5

40
5

24
36
-

15
10
12
3

45
5
4
6

60
5
6
9

25
10

15
20

20
15

50
20
18
12

80
10
6
24

95
10
9
36

50
100
20
40

40
120
24
48

55
150
30
60

160
40

192
24

240
40

200

216

280

7500

5000

6000

PRODUCTION BUDGET

Sales Quantities
(+) Closing Stock
(-) Opening Stock

A
7500
2400
3000

B
5000
1600
2000

C
6000
2000
2500

Production Quantities

6,900 4,600 5,500

MATERIAL USAGE BUDGET

Product
DM 11
A ( 6,900X5: 6900x5) 34,500
B (4600x10: 4600x5)
-C (5500X12:500x9)
66,000

DM 21 DM 31
-34,500
46,000 23,000
42,500
--

1,00,500 95,500 57,500

PURCHASE BUDGET

DM 11
Materials
100500
(+) Closing Stock 22050
(-) Opening Stock 24500

DM 21

DM 31

95500
18450
20500

57500
15750
17500

Purchase Units
98,050 93,450 55,750
Price P. Unit (Rs.)
2
4
1
Purchase (Value) 1,96,100 3,73,800 55,750

Cash Budget

Cash Budget is a detailed estimate

of Cash Receipts from all sources
and Cash Payments for all purposes
and the resultant Cash Balance
during the budget period

Cash Budget
Cash Budget For the Period..
Particulars
Total

Additions Opening Balance

Budgeted Net Profit
Depreciations
Provisions
Sale Of Plants
Issue Of Capital and Debentures
Reduction in Debtors
Reduction In stock
Accrued Expenses
Increase In Liabilities
Total Additions
Total Cash Available

Deductions
Dividends
Prepayments
Capital Profit
Increase in Stocks
Increase in Debtors
Decrease in Liabilities
Total Deductions
Cl Balance Of Cash

Jan
Rs

Feb
Rs

Mar
Rs

Rs

ZBB - applications

1 Identifying decision Units

2 Listing programmes, activities of each DU
3 Setting goals of activities of each DU
4 Identifying alternatives of activities
5 Designing Decision Package
6 Evaluating & Ranking each DP
7 Allocating Resources according to priority

ZBB -Cycle

Programmes &

ZBB Decision Packages

1 Mutually Exclusive
2 Incremental

ACCOUNTING(FINANACIAL & COST) OF

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