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

Co-ordination

Communication

Motivation

Performance Evaluation

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

COST OF PRODUCTION BUDGET

Material

Labour

Overheads

Purchase

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 A mtR s. 40 P.U. 2.00 2.40 2.00 6.40 7.20 8.20 6.40 28 Product C Units Total Amt Units Rs.30 P.U. 1.20 1.35 1.50 4.05 3.60 4.80 4.50 16.95 5,000 6,000 5,000 16,000 18,000 20,000 16,000 70,000 A Amt mtRs (Rs) .20 P.U 2.00 1.60 1.40 5.00 6.00 6.40 5.60 23 5.20 5.35 4.90 15.45 16.80 19.20 16.50 67.95

Jan Feb March Total IQ IIQ III Q IV Q Total

4,000 4,500 5,000 13,500 12,000 16,000 15,000 56,500

10,000 8,000 7,000 25,000 30,000 32,000 28,000 115000

Sales Budget
Budget Actual Product Quantity Price Quantity A B B A A B 10,000 6,000 12,000 15,000 8,000 5,000 10 5 5 10 10 5 11,500 7,000 12,500 16,500 9,500 5,250

Area North South East West

Area

Product

Budget June 30, 05 Q P

10 5

Budget June 30,04 Q

10,000 6,000 16,000 -12,000 12,000 15,000 -15,000 8,000 5,000 13,000 33,000 23,000 10 5 10 5 10 --5

Actual June 30,03 Q

11,500 7,000 18,500 -12,500 12,500 16,500 -16,500 9,500 5,250 14,750 37,500 24,750 10 5 10 5 10 -5

V
12,0000 32,500 1,52,500

P
10 5

V
1,00,000 30,000 1,30,000 -60,000 60,000 1,50,000 -1,50,000 80,000 25,000 1,05,000 3,30,000 1,15,000

P
10 5

V
1,15,000 35,000 1,50,000 -62,500 62,500 1,65,000 -1,65,000 95,000 26,250 1,21,250 3,75,000 1,23,750

North

A B Total A

12,000 6,500 18,500 3,000 13,000 16,000 17,000 5,000 22,000 9,000 5,500 14,500 41,000 30,000

10 5

30,000 65,000 95,000

South

B Total

East

A B Total

10 5

1,70,000 25,000 1,95,000

West

A B Total

10 5

90,000 27,500 1,17,500

Total

A B

10 5

4,10,000 1,50,000

Total

71,000

5,60,000

56,000

4,45,000

62,250

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 3,000 42,000 Jun: 5000
43,050 May:8000

Add For Defectives 2 % 1,050 Quantity for Production 43,050

PRODUCTION BUDGET FOR THE YEAR

PRODUCTION SALES
(UNITS)

CLOSING OPENING STOCK STOCK (UNITS) (UNITS)

PRODUCTION
BUDGET (UNITS) 1+2=3

1 X Y Z 4800 2400 2400

2 800 400 400

3 600 300 800

4 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 O F M A T

MATERIA L
QT. RE Q. FOR PRO DU CTI ON R A T E P. U. C O S T

LABOUR
O P E R A TI O N G R A D E H O U RS HO USR LY RA TE

F.O.H.
C D C O EP OS S T. T T T O T A L C OS T C OS T P. U.

1 2 3 4 1 2 3 1 2 3

1 2

X Y

1 2 1

X Y Z

Total

Products
A Rs. P. Unit
10 5 15 10 12 3 25 10 50 20 18 12 50 100 20 40 160 40 200 7500

D. M.a.t.

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

B Rs. P. Unit
40 5 45 5 4 6 15 20 80 10 6 24 40 120 24 48 192 24 216 5000

C Rs. P. Unit
24 36 60 5 6 9 20 15 95 10 9 36 55 150 30 60 240 40 280 6000

D. Lab.

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

PRODUCTION BUDGET
A 7500 2400 3000 6,900 B 5000 1600 2000 4,600 C 6000 2000 2500 5,500

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

MATERIAL USAGE BUDGET

Product DM 11 A ( 6,900X5: 6900x5) 34,500 B (4600x10: 4600x5) -C (5500X12:500x9) 66,000 1,00,500 DM 21 -46,000 42,500 95,500 DM 31 34,500 23,000 -57,500

PURCHASE BUDGET

DM 11 Materials 100500 (+) Closing Stock 22050 (-) Opening Stock 24500 Purchase Units 98,050 Price P. Unit (Rs.) 2 Purchase (Value) 1,96,100

DM 21 95500 18450 20500 93,450 4 3,73,800

DM 31 57500 15750 17500 55,750 1 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
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

Jan
Rs

Feb
Rs

Mar
Rs Rs

Additions Opening Balance

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

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

ZBB Decision Packages