THIS IS THE PART B OF MANAGEMENT ACCOUNTING ON MY VISION THANK YOU!!!

1. P A R T - B
Management Accounting

2. B U D G E T A R Y C O N T R O L

3. BUDGETARY CONTROL
 MEANING:
A budget is a plan of action expressed in
financial terms or non financial estimate of future
business conditions such as the sale ,cost and profit .
A budget is a tool which helps the management in
planning and control of business activities.

4.  Definition:
According to JCMA ,England ,a budget is ,”a
financial and /or quantitative statement ,prepared
and approval prior to a defined period of time ,of the
policy to be pursued during the period for the
purpose attaining a given objective”.

5.  According to the definition ,the essential features of
a budget are:
1. It is prepared for a definite period well in advance
2. It may be stated in terms or quantity of money or
both
3. It is a statement defining the objectives to be
attained and the policy to be followed to achieve
them in a future period.

6. Steps for budgetary
 Establishment of budget for each section of the
organization
 Recording of actual performance.
 Continuous comparison of the actual performance
with the budget
 In case there , is a difference between actual and
budgeted performance , taking suitable remedial
action.
 Revision of budget if necessary

7. Type of budget
 Sale budget
 Materials budget
 Direct labour budget
 Factory overhead budget
 Administrative expenses budget
 Selling and distribution overhead budget
 Capital expenditure budget
 Cash budget

8. Zero based budgeting
Definition
ZBB is defined as” a planning and budgeting process
which requires each to manage his entire budget
request in detail from scratch (hence zero base)
and shifts the burden of proof to each manager to
justify why he should spend money at all . The
approach requires that all activities be analysed and
in the ranked in the order of importance”

9. Steps in zero base budgeting
 Determination of objectives
 Determination of the extent of application
 Cost benefit analysis
 Preparation of budgets

10. Marginal costing

11. Marginal costing
 Definition
According to ICMA ,England ,”marginal cost is
the amount , at any given volume of output ,by which
aggregate costs are changed , if the volume of output
is increased or decreased by one unit”.

12.  Fixed cost
 Variable cost
 Contribution
contribution =sales-variable cost
contribution =fixed cost + profit
 Margin of safety
profit
p.v.ratio
 Angle of incidence
 Profit volume ratio contribution
p.V ratio = *100
sales
 Break even point

13. Format
Marginal cost statement of product A
sales *****
Less: marginal cost:
direct labour
Direct material
Variable overhead *****
Contribution ******
Less: fixed cost ******
profit *******

14. Thank you