budget and budgetary control

1. ASSIGNMEN
T-I
 SUBJECT -FOOD COSTING
 CODE -HPM 106
 SUBMITTED TO-Professor ANJANI
NANDAN
 SUBMITTED BY-PRATIKSHA DIYALI
 DATE - 6TH JANUARY 2021

2. Budgetary control
&Its Types

3. INTRODUCTION
 where it intends to go i.e. organizational
objectives
 how it intends to accomplish its
objective i.e. plans
 whether individual plans fit in the overall
organizational objective. i.e.
coordination
 whether operations conform to the plan
of operations relating to that period i.e.
control “Budgetary control is the
device that a company uses for all these
purposes.”

4. “ A plan expressed in money. It is prepared
and approved prior to the budget period
and may show income, expenditure and
the capital to be employed. May be drawn
up showing incremental effects on former
budgeted or actual figures, or be compiled
by Zero-based budgeting.”

5. BUDGETARY CONTROL?
Budgetary controls the process by
which budgets are prepared for the
future period and are compared with the
actual performance for finding out
variances, if any. The comparison of
budgeted figures with actual figures will
help the management to find out
variances and take corrective actions
without any delay. It is also the use of the
comprehensive system of budgeting to
aid management in carrying out its
functions like planning, coordination and
control.

6. CLASSIFICATION OF
BUDGETS
ACCORDING TO
TIME
ACCORDING TO FUNCTION ACCORDING TO
FLEXIBILITY
8. Long term budget 1. Sales budget 1. Fixed budget
9. Short term budget 2. Production budget 2. Flexible
10. Current budget 3. Cost of Production budget
11. Rolling budget 4. Purchase budget
4. Personnel budget
6. R & D budget
7. Capital Expenditure budget
8. Cash budget
9. Master budget

7. 1. SALES BUDGET: Sales budget is the
most important budget based on which all
the other budgets are built up. This budget is
a forecast of quantities and values of sales
to be achieved in a budget period.
 2. PRODUCTION BUDGET: Production
budget involves planning the level of production
which in turn involves the answer to the following
questions: a. What is to be produced? b. When is
it to be produced? c. How is it to be produced? d.
Where is it to be produced?

8. 2.PRODUCTION
BUDGET:
 Production budget involves planning the
level of production which in turn involves
the answer to the following questions:
 a. What is to be produced?
 b. When is it to be produced?
 c. How is it to be produced?
 d. Where is it to be produced?

9. 3. COST OF PRODUCTION
BUDGET:
 This budget is an estimate of cost of
output planned for a budget period
and may be classified into – • Material
Cost Budget • Labour Cost Budget •
Overhead Cost Budget
 4. PURCHASE BUDGET:
 This budget provides information
about the materials to be
acquired from the market during the
budget period.

10. 5. PERSONNEL BUDGET:
This budget gives an estimate of the requirements
of direct labour essential to meet the production
target. This budget may be classified into –
a. Labour requirement budget
b. Labour recruitment budget
 6. RESEARCH AND DEVELOPMENT
BUDGET: This budget provides an
estimate of expenditure to be incurred on R & D
during the budget period. A R&D budget
is prepared taking into consideration the
research projects in hand and new R & D
projects to be taken up.

11. 7. CAPITAL EXPENDITURE BUDGET:
This is an important budget providing for acquisition of
assets necessitated by the following factors:
a. Replacement of existing assets.
b . Purchase of additional assets to meet increased
production c. Installation of improved type of machinery
to reduce costs.
 8. CASH BUDGET:
This budget gives an estimate of the
anticipated receipts and payments of cash
during the budget period. Cash
budget makes the provision for minimum
cash balance to be maintained at all times.

12. 9. MASTER BUDGET: CIMA defines this
budget as “ The summary budget
incorporating its component functional
budget and which is finally approved,
adopted and employed”. Thus master
budget is a summary of all functional
budgets in capsule form available in one
report.
 10. FIXED BUDGET: This is defined as
a budget which is designed to remain
unchanged irrespective of the volume of
output or turnover attained. This budget
will, therefore, be useful only when the
actual level of activity corresponds to the

13. 11. FLEXIBLE BUDGET: CIMA defines this budget
as one “ which, by recognising the difference in
behaviour between fixed and variable costs in
relation to fluctuations in output, turnover or other
variable factors such as number of employees, is
designed to change appropriately with such
fluctuations”.
 12. PERFORMANCE BUDGETING:
These days budgets are established in
such a way so that each item of
expenditure is related to specific
responsibility centre and is closely linked
with the performance of that standard

14. 13. ZERO BASE
BUDGETING:
 The zero base budgeting is not based
on the incremental approach and
previous figures are not adopted as the
base.
 Zero is taken as the base and a budget
is developed on the basis of likely
activities for the future period.
 A unique feature of ZBB is that it tries
to help management answer the
question, “Suppose we are to start our
business from scratch, on what activities
would we spent out money and to what
activities would we give the highest
priority?”

15. 14. RESPONSIBILITY
ACCOUNTING:
 Responsibility accounting fixes
responsibility for cost control purposes
by establishing responsibility centres
namely – a. Cost centre
b. Profit centre c. Investment
centre Principles of responsibility
accounting are as follows: 1.
Fixation of targets for each responsibility
centre 2. Actual performance is
compared with the target 3. The
variances therein are analyzed so as to
fix the responsibility of centres. 4.
Taking corrective action.

16. CONCLUSION:
 Preparation of budgets is the first step in the
budgetary control system.
 Implementation of budgets is the second
phase.
 But preparation and implementation of
budgets alone will not achieve much unless a
comparison is made regularly between the
actual performance and the budgeted
performance.
 Continuous and proper reporting makes this
possible.
 To ensure the success of budgetary control
system, proper follow up action has to be
taken immediately for the reports submitted.

17. THANKYO
U