The document discusses budgetary control techniques. It defines a budget and budgetary control. The objectives of budgetary control include planning income/expenditure, maximizing profits, providing capital, coordinating activities, evaluating performance, and decentralizing responsibilities. Budgets are classified by function (e.g. sales, production), time (long term, short term, current), and rigidity (fixed, flexible). Techniques for budgetary control include planning-programme budgeting systems, zero-based budgeting, variance analysis, responsibility accounting, fund adjustment, and human resource accounting.

1. BUDGETARY CONTROL
TECHNIQUES
R.ArunKumar,AP/Mech,RIT

2. BUDGET:
 According to Brown and Howard, ‘A budget is a pre – determined
statement of management policy which provides a standard for
comparison with actual results during a given period’.
R.ArunKumar,AP/Mech,RIT

3. BUDGETARY CONTROL:
 Budgetary control is the process of determining various
budgets for the business unit in future.
 It is also called as system of controlling costs through budget
preparation.
R.ArunKumar,AP/Mech,RIT

4. OBJECTIVES OF BUDGETARY CONTROL:
1. Helps to plan and control the income and expenditure of the
organization.
R.ArunKumar,AP/Mech,RIT

5. OBJECTIVES OF BUDGETARY CONTROL:
2. Maximizes the profit for the organization.
R.ArunKumar,AP/Mech,RIT

6. OBJECTIVES OF BUDGETARY CONTROL:
3. Provides adequate capital for working.
R.ArunKumar,AP/Mech,RIT

7. OBJECTIVES OF BUDGETARY CONTROL:
4. Coordinates the activities of different units in an organization.
R.ArunKumar,AP/Mech,RIT

8. OBJECTIVES OF BUDGETARY CONTROL:
5. Helps to evaluate the performance.
R.ArunKumar,AP/Mech,RIT

9. OBJECTIVES OF BUDGETARY CONTROL:
6. Decentralizes the responsibilities.
R.ArunKumar,AP/Mech,RIT

10. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1a) Sales budget:
 It is the estimate of expected sales during a budget period.
 The factors to be considered are plant capacity, past sales
data.
R.ArunKumar,AP/Mech,RIT

11. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1b) Production budget:
 Production budget is a forecast of the output for the period
analyzed.
 The factors to be considered are plant capacity, resource
availability, sales requirements.
R.ArunKumar,AP/Mech,RIT

12. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1c) Labour budget:
 It is the forecast of requirements of direct labour essential to
meet the production targets.
R.ArunKumar,AP/Mech,RIT

13. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1d) Capital expenditure budget:
 It includes all the initial investment cost of the organization.
R.ArunKumar,AP/Mech,RIT

14. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1e) Research and development budget:
 Focuses on budget required to develop new products.
R.ArunKumar,AP/Mech,RIT

15. CLASSIFICATIONS OF BUDGET:
1. Classification based on function:
1f) Profit budget:
 Profit budget is also called as master budget.
R.ArunKumar,AP/Mech,RIT

16. CLASSIFICATIONS OF BUDGET:
2. Classification based on time:
2a) Long term budget:
 Period of time for long term budgets are 5 to 10 years.
R.ArunKumar,AP/Mech,RIT

17. CLASSIFICATIONS OF BUDGET:
2. Classification based on time:
2b) Short term budget:
 Period of time for short term budgets are less than 5 years.
R.ArunKumar,AP/Mech,RIT

18. CLASSIFICATIONS OF BUDGET:
2. Classification based on time:
2c) Current budget:
 Includes the budget expense for day to day activities.
R.ArunKumar,AP/Mech,RIT

19. CLASSIFICATIONS OF BUDGET:
3. Classification based on rigidity:
3a) Fixed budget:
 Budget expenses that are predefined are called as fixed budget.
R.ArunKumar,AP/Mech,RIT

20. CLASSIFICATIONS OF BUDGET:
3. Classification based on rigidity:
3b) Flexible budget:
 Budget expenses that tends to vary are called as flexible budget.
R.ArunKumar,AP/Mech,RIT

21. BUDGETARY CONTROL TECHNIQUES:
1. Planning – programme budgetary systems (PPBS):
 Analyzing the basic objectives of policies and activity of each
programme in the organization.
 Measuring the total cost and choosing the best alternative.
R.ArunKumar,AP/Mech,RIT

22. BUDGETARY CONTROL TECHNIQUES:
2. Zero – based budgeting:
 In this method, every next year budget is made on nil base.
 The expected income will be equal to the expected expenses.
 This process involves three steps: Scheduling, prioritizing and
resource allocation.
R.ArunKumar,AP/Mech,RIT

23. BUDGETARY CONTROL TECHNIQUES:
3. Variance analysis:
 Estimated budget of the organization expenditure will be
compared with actual accounting figures to measure the
variance.
R.ArunKumar,AP/Mech,RIT

24. BUDGETARY CONTROL TECHNIQUES:
4. Responsibility accounting:
 The organization is classified as cost centre, profit centre and
investment centre.
 Based on this classification employee will be assigned with a
target.
 On the basis of achievement he / she will be rewarded.
R.ArunKumar,AP/Mech,RIT

25. BUDGETARY CONTROL TECHNIQUES:
5. Fund adjustment:
 Top management will be altering the fund allocation based on
the requirement.
R.ArunKumar,AP/Mech,RIT

26. BUDGETARY CONTROL TECHNIQUES:
6. HR accounting:
 It deals with human resource control.
 Investment on HR is a long term investment for any
organization.
 e.g.: training and development programme, disciplinary
programs.
R.ArunKumar,AP/Mech,RIT