Management Accounting- Budgetary control

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BUDGETARY CONTROL
-An Introduction
Dr.C.Rajalakshumi, Asst prof.,
VVV College, Virudhunagar.

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BUDGETARY CONTROL
Budgetary Control is a process for
managers to set financial and performance goals
with budgets, compare the actual results, and
adjust performance, as it is needed.
It helps planning, coordination between
departments, decision-making, monitoring of
operating results and motivation of personnel to
achieve business objectives.

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OBJECTIVES
1. Reallocation of Resources
2. Reducing inequalities in income and
wealth
3. Economic Stability
4. Management of Public Enterprises
5. Economic Growth
6. Reducing regional disparities

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ADVANTAGES OF BUDGETARY CONTROL
1. Maximization of Profits
2. coordination of departments
3. Specific Aims to reach the common goal
4. Tool for Measuring Performance of the concern
5. Economy in spending
6. Determination of weak spots
7. Corrective measures on discrepancy
8. Reduce the cost of production

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Limitations of Budgetary Control
1. Uncertain Future - predictions may not always come true
2. Budgetary Revision Required - prepared on the
assumptions that certain conditions will prevail.
3. Discourage Efficient Persons - targets are given to every
person in the organization
4. Problem in Coordination- one department affects the
results of other departments.
5. Depends Upon Support of Top Management- a lack of
support from top management then this system will
collapse.

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TYPES OF
BUDGETARY
CONTROL

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SALES BUDGET
An estimate of future sales, often broken
down into both units and currency.
It is used to create company sales goals.
A sales budget provides an estimate of the
volume of goods and services that a company
proposes to sell in a future period.

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PRODUCTION BUDGET
an estimate of the number of units that must be
manufactured to meet the sales goals.
The production budget also estimates the
various costs involved with manufacturing those
units, including labour and material. Created by
product-oriented companies.

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MATERIAL BUDGET
Material budgeting refers to the procedure of
preparing material or purchase budget in terms of
quantity and money value of materials to be procured
in a specified time period. Not only does it helps in
estimating the material prices over a period of time, but
also analyses the material requirement.

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PROCUREMENT BUDGET
Procurement budgets typically provide managers
with a specific value they can spend to procure the goods
or services they need.
The process of procurement is often a key part of a
company's strategy because the ability to purchase certain
materials or services can determine if operations will be
profitable.

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THANK YOU