A budget is a financial or quantitative
statement , prepared prior to a defined period of
time , for the purpose of attaining a given
BUDGETRY CONTROL –
It is a
of planning and controlling COSTS.
ORGANIZATION FOR BUDGETRY CONTROL
Level of Activity
Principal Budget Factor Sales Activity
A functional budget is a budget of INCOME
and/or EXPENDITURE applicable to particular
FUNCTION- Refers to a department or a
Example – Sales , production , Purchase ,
Administration Cost etc…
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
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/-
The Selling and Distribution Cost Budget is a forecast of the
cost of selling and distribution of the goods during the
Budget is based upon the SALES VOLUME
ELEMENT OF COST
1) Direct selling
2) Sales Office Expenses
1+2 +3 + 4
1+2 +3 + 4
Production Budget is a forecast of the production for
the budget period. It may be expressed in terms of –
• Standard Hours(A standard hour is the quality of output
or amount of work which should be performed in one
Production budget is prepared on the basis of
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
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
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
One TV needs
3 picture tube
On 1st Dec following stock was in godown
TV – 100
Picture Tube – 600
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 .
PRODUCTION BUDGET FOR TV
(+) units to
Units to be
PURCHASE BUDGET FOR Picture Tube
Closing stock 780
stock of raw
Units to be
PRODUCTION COST BUDGET
This budget is a forecast of the cost of production estimated
in the Production Budget.
Period – April 2013
Production as per
ELEMENTS OF COST
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
• Help in Labour Management.
• 1) Direct the It shows
planned outlay on direct and indirect wages .
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
CAPITAL EXPENDITURE BUDGET
Planned for capital in monetary terms. It is prepared for long term.
All the fixed assets are valued in monetary terms.
Also Known as NIL-BUDGET
Steps in ZBB
1) Identification of ‘DECISION UNITS’.
2) Ranking of all Decision Packages.
3) Allocation of the resources accordingly.
1) Careful planning.
2) Involvement of lower and middle level management.
3) Resources are allocated according to needs and benefits derived.