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PRESENTED BY
– GROUP 5
BUDGET –
A budget is a financial or quantitative
statement , prepared prior to a defined period of
time , for the purpose ...
ORGANIZATION FOR BUDGETRY CONTROL
 Budget Centre
 Organization Chart
 Budget Committee
 Budget Manual
 Budget Period
...
Chief
Executive

Budget
Officer

Purchase
Manager

Develop
Manager

Purcha
sing
Budget

R&D
Budget

Sales
Manager

Selling...
A functional budget is a budget of INCOME
and/or EXPENDITURE applicable to particular
function.
FUNCTION- Refers to a depa...
The SALES BUDGET is a forecast of total sales which may be
expressed in monetary or qualitative terms.

Generally quantita...
The Selling and Distribution Cost Budget is a forecast of the
cost of selling and distribution of the goods during the
bud...
Production Budget is a forecast of the production for
the budget period. It may be expressed in terms of –
• Units
• Stand...
The budget represents the purchase to be made during the budget
period. This will include direct and indirect materials an...
Example
One TV needs

3 picture tube

On 1st Dec following stock was in godown
TV – 100
Picture Tube – 600
Sales Position
...
PRODUCTION BUDGET FOR TV
Particulars

Dec

Jan

Feb

Mar

April

Closing
stock of
finished
products

250

350

400

500

(...
PURCHASE BUDGET FOR Picture Tube
Particular

Dec

Jan

Feb

Closing stock 780
of raw
material units

1065

1230

(3150*3)=...
PRODUCTION COST BUDGET
This budget is a forecast of the cost of production estimated
in the Production Budget.
Example

Pe...
PERSONNEL BUDGETThis Budget will show in financial terms , the number of working hours or in
other convenient units.
PURPO...
PLANT UTILIZATION BUDGET
This Budget shows the estimated plant facilities required to meet the
budgeted production as set ...
Also Known as NIL-BUDGET
DEMAND DEPENDENT
Steps in ZBB

1) Identification of ‘DECISION UNITS’.
2) Ranking of all Decision ...
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Cost ppt

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Budgetary Control

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Transcript of "Cost ppt"

  1. 1. PRESENTED BY – GROUP 5
  2. 2. BUDGET – A budget is a financial or quantitative statement , prepared prior to a defined period of time , for the purpose of attaining a given objective BUDGETRY CONTROL – It is a of planning and controlling COSTS. system
  3. 3. ORGANIZATION FOR BUDGETRY CONTROL  Budget Centre  Organization Chart  Budget Committee  Budget Manual  Budget Period  Level of Activity  Principal Budget Factor Sales Activity Plant Capacity Raw Material Labour Management Working Capital
  4. 4. Chief Executive Budget Officer Purchase Manager Develop Manager Purcha sing Budget R&D Budget Sales Manager Selling and Dist. Budget Production Manager Produc tion Budget Personnel Manager Labour Account ant Producti on cost Admin. Cost, Capital expendit ure
  5. 5. A functional budget is a budget of INCOME and/or EXPENDITURE applicable to particular function. FUNCTION- Refers to a department or a process. Example – Sales , production , Purchase , Administration Cost etc…
  6. 6. The SALES BUDGET is a forecast of total sales which may be expressed in monetary or qualitative terms. Generally quantitative budget is prepared first then it is translated into monetary value Example Budgeted sales for year 2004 X - 1600 units at Rs. 10 each Y - 800 units at Rs. 9 each Actual sales for year 2004 X- 2000 units at Rs. 10 each Y- 400 units at Rs. 9 each Budgeted sales of 2005 X- 1920 at 11/Y- 840 at 8/-
  7. 7. The Selling and Distribution Cost Budget is a forecast of the cost of selling and distribution of the goods during the budget period. Budget is based upon the SALES VOLUME ELEMENT OF COST BUDGET PREVIOUS BUDGET 1) Direct selling expenses Salaries Commissions, etc… - - 2) Sales Office Expenses - 3)Distribution Expenses - 4)Advertising Expenses - TOTAL 1+2 +3 + 4 1+2 +3 + 4
  8. 8. Production Budget is a forecast of the production for the budget period. It may be expressed in terms of – • Units • Standard Hours(A standard hour is the quality of output or amount of work which should be performed in one hour) Production budget is prepared on the basis of      Sales Budget. The production capacity of the factory. The estimated changes in stock position. The inherent loss in production, if any. The policy governing the manufacturer or purchase of components.
  9. 9. The budget represents the purchase to be made during the budget period. This will include direct and indirect materials and services. The purchasing budget may be expressed in terms of quantity or money. PURPOSE OF PURCHASE BUDGET • To indicate cash requirements in respect of purchase to be made during budget period • To enable the purchasing department to plan its operations in time in respect of purchase so that long term forward contract be arranged for
  10. 10. Example One TV needs 3 picture tube On 1st Dec following stock was in godown TV – 100 Picture Tube – 600 Sales Position NOV – 2000 DEC - 3000 JAN - 2500 FEB - 3500 MARCH – 4000 APRIL - 5000. It is expected that 10% of TV , picture tube of next month requirement will be kept in stock from 31st Dec onwards. Prepare Production and Purchase budget for DEC , JAN, FEB .
  11. 11. PRODUCTION BUDGET FOR TV Particulars Dec Jan Feb Mar April Closing stock of finished products 250 350 400 500 (+) units to be sold 3000 2500 3500 4000 5000 (-) Opening stock of finished goods 100 250 350 400 500 Units to be produced 3150 2600 3550 4100 4500
  12. 12. PURCHASE BUDGET FOR Picture Tube Particular Dec Jan Feb Closing stock 780 of raw material units 1065 1230 (3150*3)=9450 (+) Raw Material units required for production (2600*3)= 7800 (3500*3)= 10650 (4100*3)= 12300 600 780 1065 1230 9630 8085 10815 (-) Opening stock of raw material unit Units to be produced March
  13. 13. PRODUCTION COST BUDGET This budget is a forecast of the cost of production estimated in the Production Budget. Example Period – April 2013 Particulars Dep 1 Dep 2 Dep 3 TOTAL Production as per Budget(Units) 250 300 600 1150 Direct Material 2 3 4 9 Direct Labour 5 4 1 10 Direct Expenses 9 7 5 21 Factory Overheads 4 3 2 9 PRODUCTION COST 20 17 12 49 ELEMENTS OF COST
  14. 14. PERSONNEL BUDGETThis Budget will show in financial terms , the number of working hours or in other convenient units. PURPOSE of PERSONNEL Budget Classificati No of Hours Man-hours Rate/hr on workers • Help in Labour Management. • 1) Direct the It shows planned outlay on direct and indirect wages . Labour Total Amount TOTAL (1) 2) Indirect Production - - - - Admin. - - - - Selling & Dist. - - - - R&D - - - TOTAL (2) TOTAL (1+2)
  15. 15. PLANT UTILIZATION BUDGET This Budget shows the estimated plant facilities required to meet the budgeted production as set out in production budget. REPAIRS and MAINTENANCE BUDGET This budget may be set in four parts – Preventive , emergency , major and for cost related to Maintenance Budget CAPITAL EXPENDITURE BUDGET Planned for capital in monetary terms. It is prepared for long term. All the fixed assets are valued in monetary terms.
  16. 16. Also Known as NIL-BUDGET DEMAND DEPENDENT Steps in ZBB 1) Identification of ‘DECISION UNITS’. 2) Ranking of all Decision Packages. 3) Allocation of the resources accordingly. Advantages – 1) Careful planning. 2) Involvement of lower and middle level management. 3) Resources are allocated according to needs and benefits derived.
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