budgetory control.pptx
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This document discusses budgetary controlling. It defines a budget as a formal financial plan for a given period of time used to coordinate activities and measure actual performance. Budgetary control compares actual results to budgets, with variances assigned to responsible individuals. Advantages include promoting planning, coordination, performance evaluation, and resource allocation. The document describes characteristics like participation and flexibility. It also outlines different types of budgets like sales, production, labor, materials, and cash budgets.
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Unit v
The document discusses various concepts related to controlling in management. It defines control and describes the control process which involves establishing standards, measuring performance, comparing performance to standards, and taking corrective actions. It also discusses requirements for effective control like tailoring control to plans/positions, making it objective and flexible. Non-budgetary control techniques like statistical data, break-even analysis and personal observation are also summarized.
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Unitv notes
The document provides definitions and explanations of key concepts related to controlling in management. It discusses the control process, which involves establishing standards, measuring performance, comparing performance to standards, and taking corrective actions. It also outlines various control techniques and systems managers can use, including budgetary control, non-budgetary techniques like statistical reports and audits, productivity measurement, cost control, quality control, and operational planning.
Principles of Management (MG 6851) Unit 5
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System and process of controlling
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Control is the process of ensuring actual activities conform to plans by measuring performance and correcting deviations. It involves establishing standards, measuring performance, comparing to standards, and taking corrective actions if needed. There are three types of control systems - feed forward, concurrent, and feedback. Budgetary control compares actual spending to planned spending to see if plans need adjusting. It involves preparing budgets of different types based on factors like time period, conditions, capacity, and coverage area. Non-budgetary techniques like statistical data, break-even analysis, audits, and observation also aid managerial control.
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The document discusses various concepts related to controlling in management. It defines control and describes the control process which involves establishing standards, measuring performance, comparing performance to standards, and taking corrective actions. It also discusses requirements for effective control like tailoring control to plans/positions, making it objective and flexible. Non-budgetary control techniques like statistical data, break-even analysis and personal observation are also summarized.
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The document provides definitions and explanations of key concepts related to controlling in management. It discusses the control process, which involves establishing standards, measuring performance, comparing performance to standards, and taking corrective actions. It also outlines various control techniques and systems managers can use, including budgetary control, non-budgetary techniques like statistical reports and audits, productivity measurement, cost control, quality control, and operational planning.
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Budgetary control
Budgetary control is 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.
The comparison of budgeted and actual figures will enable the management to find out discrepancies and take remedial measures at a proper time. The budgetary control is a continuous process which helps in planning and co-ordination. It provides a method of control too. A budget is a means and budgetary control is the end-result.
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The main objectives of budgetary control are given below:
1) Defining the objectives of the enterprise.
2) Providing plans for achieving the objectives so defined.
3) Coordinating the activities of various departments.
4) Operating various departments and cost centres economically and efficiently.
5) :5. Increasing the profitability by eliminating waste.
6) Centralizing the control system.
7) Correcting variances from sit standards.
8) Fixing the responsibility of various individuals in the enterprise.
Essentials of Successful Budgetary Control:
The following are the essential requisites for implementing budgetary control successfully:
1) Clearly Defined Organisational Structure:- The authority and responsibilities are to be properly defined to pin-point the responsibility of specific individuals in key positions.
2) Efficient Accounting System: - The accounting system should provide the required information in time.
3) Reporting of Deviations:- Efficient system has to be devised to reduce the differences between the budgets and actual performance.
4) Motivation: - Staff are to be appraised of the budgets and benefits they are going to derive directly and indirectly.
5) Realistic Targets: - The targets set should be realistic so that they are achievable and budgets should not frustrate the workers by fixing unrealistic targets.
6) Participation of All Departments Concerned: - Budgets are to be set for all the departments so that their participation in implementation will be effective.
7) Flexibility: - Budgets are prepared on the basis of certain conditions. If there is change in conditions budgets also should be adjusted to accommodate the changes.
8) Top Management Support: - The budgetary control system should have continuous support of top management which can ensure its all-round acceptance.
Advantages of Budgetary Control
Some of the advantages of budgetary control are:
1) Budgetary control fixes targets. Each and every department is forced to work efficiently to reach the target. Thus, it is an effective method of controlling the activities of various departments of a business unit.
2) It secures better co-ordination among various departments.
Budgetary control
Budgetary control is the process of comparing actual results to planned budgets in order to calculate variances and ensure maximum profitability. It involves preparing budgets, coordinating departments, and acting on performance results. A budget officer coordinates budgets across departments and informs management of deviations. Budget committees include department heads and are responsible for budget preparation and execution. Key factors that influence other budgets, like sales quantities, are identified. Budgetary control aims to maximize profits through planning, coordination, accountability, and correction of weaknesses.
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Unit 5_Controlling.pptx
Controlling is an important management process that helps organizations adapt to change, limit errors, and cope with complexity. There are four levels of control: operational, financial, structural, and strategic. A controller helps line managers with control activities. The control process involves establishing standards, measuring performance, comparing performance to standards, determining if corrective action is needed, and taking steps to maintain standards or correct deviations. Budgetary control and non-budgetary techniques are used. Productivity, cost, quality, purchase, and maintenance controls are also discussed. Operational planning describes short-term ways to achieve milestones and strategic goals.
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Controlling involves measuring performance against standards and correcting deviations from plans to ensure objectives are met. It is a process that includes establishing standards, measuring performance against those standards, and correcting any variations. Managers at all levels are responsible for controlling. Standards can be physical, cost-based, related to capital, revenue, programs, goals, or intangible. Budgets, statistical reports, analysis, audits, and observation are control techniques used to monitor performance.
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This document discusses budgeting and budgetary control. It defines a budget as an estimate of future costs and revenues over a period of time, and explains that budgets help prioritize spending, identify waste, and achieve financial goals. Budgetary control involves comparing actual performance to planned budgets and taking corrective actions when there are variances. The objectives of budgetary control are planning, coordination, and control. Managers use budgetary controls for financial forecasting, budgeting, and variance analysis to control project expenses. The key aspects of an effective budgetary control system are preparation of budgets, continuous comparison of actuals to plans, revision of budgets, and control reports.
Budget and Budgetary Control related to managerial accounting
The document defines budgets and budgetary control. It explains that a budget is a financial plan outlining expected revenues and expenses. Budgetary control involves establishing budgets and comparing actual results to ensure goals are met. The key aspects of budgetary control are continuous monitoring, variance analysis, and taking corrective actions. The document also describes different types of budgets such as operating, capital, and master budgets, as well as fixed and flexible budgets.
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This document provides an overview of budgets, budgeting processes, and budget types. It discusses that a budget quantitatively expresses plans to achieve objectives and allows for comparison of actual vs planned outcomes. The budgeting process involves identifying limiting factors, preparing functional budgets in a logical order, aggregating into a master budget, and comparing actuals to flexed budgets to identify variances. Different types of budgets include long-term/short-term, fixed/flexible, functional like sales/production, and the master budget. Budgets play roles in planning, control, communication, and motivation.
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Meaning of budget
The document discusses budgets and budgetary control. It defines a budget as a detailed plan of operations for a future period that acts as a business barometer. Budgetary control involves establishing budgets relating to executive responsibilities and comparing actual results to budgets to motivate employees and secure objectives. The objectives of budgetary control include planning, communication, coordination, control, and motivation. Advantages are defining objectives, revealing variances, guiding executive action, and providing a basis for future budgets. Limitations include using estimates and continually adapting budgets. Budgets can be classified by time, function, and flexibility.
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The document discusses budgets and budgeting processes. It begins by defining what a budget is and its importance for planning and control. It then outlines some of the main benefits of budgeting programs, such as enhancing managerial perspective, flagging potential problems, and coordinating activities. It also notes some potential disadvantages, such as the time required and risk of "gaming the system." The document goes on to provide principles and procedures for successful budgeting. Finally, it differentiates between types of budgets, such as functional budgets based on departments and master budgets based on the entire organization.
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This document discusses flexible budgets. It defines a flexible budget as a budget that changes based on different output levels to recognize varying cost behavior patterns. Flexible budgets are prepared for a range of activity levels rather than a single level. They provide a dynamic basis for comparison and a tailored budget for each output volume. Some key advantages are determining costs, sales, and profits at different operating capacities and identifying profit areas.
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This document provides an overview of sales forecasting, budgeting, and cost control. It defines each topic and outlines key factors, methods, steps, and advantages/limitations. For sales forecasting, it discusses definition, importance, factors affecting forecasts, common methods like time series analysis and regression analysis. For budgets, it defines budgetary control and outlines budget types, objectives, principles, and advantages/disadvantages. It also describes the process of budget control. Finally, it defines cost control and discusses techniques like standard costing and variance analysis to establish norms and take corrective actions.
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Budgetry control
A budget is a plan for projected income and expenses over a defined period. Budgeting involves formulating budgets, while budgetary control uses budgets to plan and control all aspects of production. Key elements of budgetary control include preparing budgets for each department, conducting ongoing comparisons of actual vs. budgeted performance, and taking corrective actions on variances. Budgets can be classified by time period (long-term vs. short-term), function (sales, production, etc.), or flexibility (fixed vs. flexible). Zero-based budgeting requires justifying all expenses for each new period without relying on previous budgets.
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BUDGETING F2.pptx
The opening balance for October would be $600, which was the projected balance at the end of September.
Cash flow budgets are prepared on a rolling basis, with the closing balance from one period becoming the opening balance for the next period.
Budgetary control
The document discusses budgeting and budgetary control. It defines a budget as a financial plan for a defined period. Budgets estimate profit potential, are stated in monetary terms, generally cover one year, and require management approval. The key aspects of budgets are setting objectives, understanding cost behavior, coordination, communication, flexibility, and accounting data support. Budgets are used for planning, coordination, responsibility assignment, performance evaluation, and adapting to changing conditions. Budgetary control involves establishing budgets, tracking actual performance, analyzing variances, and taking corrective actions.
Budgeting and budgetary control
Budgeting faces several challenges: (1) estimating an uncertain future, (2) gaining buy-in from budget holders, and (3) responding to unplanned changes. To overcome these, companies use flexible budgets, involve stakeholders, and regularly update budgets. Effective budgeting requires open communication and adapting to new information.
Management Accounting Unit - 2. B.Com(Hons)/B.Com/BBA/MBApdf
Management Accounting
B.Com (Hons.) Semester - 4th
Unit -2
University of Lucknow, Lucknow
Budgetary control
Budgetary control is 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.
The comparison of budgeted and actual figures will enable the management to find out discrepancies and take remedial measures at a proper time. The budgetary control is a continuous process which helps in planning and co-ordination. It provides a method of control too. A budget is a means and budgetary control is the end-result.
Objectives of Budgetary Control
The main objectives of budgetary control are given below:
1) Defining the objectives of the enterprise.
2) Providing plans for achieving the objectives so defined.
3) Coordinating the activities of various departments.
4) Operating various departments and cost centres economically and efficiently.
5) :5. Increasing the profitability by eliminating waste.
6) Centralizing the control system.
7) Correcting variances from sit standards.
8) Fixing the responsibility of various individuals in the enterprise.
Essentials of Successful Budgetary Control:
The following are the essential requisites for implementing budgetary control successfully:
1) Clearly Defined Organisational Structure:- The authority and responsibilities are to be properly defined to pin-point the responsibility of specific individuals in key positions.
2) Efficient Accounting System: - The accounting system should provide the required information in time.
3) Reporting of Deviations:- Efficient system has to be devised to reduce the differences between the budgets and actual performance.
4) Motivation: - Staff are to be appraised of the budgets and benefits they are going to derive directly and indirectly.
5) Realistic Targets: - The targets set should be realistic so that they are achievable and budgets should not frustrate the workers by fixing unrealistic targets.
6) Participation of All Departments Concerned: - Budgets are to be set for all the departments so that their participation in implementation will be effective.
7) Flexibility: - Budgets are prepared on the basis of certain conditions. If there is change in conditions budgets also should be adjusted to accommodate the changes.
8) Top Management Support: - The budgetary control system should have continuous support of top management which can ensure its all-round acceptance.
Advantages of Budgetary Control
Some of the advantages of budgetary control are:
1) Budgetary control fixes targets. Each and every department is forced to work efficiently to reach the target. Thus, it is an effective method of controlling the activities of various departments of a business unit.
2) It secures better co-ordination among various departments.
Budgetary control
Budgetary control is the process of comparing actual results to planned budgets in order to calculate variances and ensure maximum profitability. It involves preparing budgets, coordinating departments, and acting on performance results. A budget officer coordinates budgets across departments and informs management of deviations. Budget committees include department heads and are responsible for budget preparation and execution. Key factors that influence other budgets, like sales quantities, are identified. Budgetary control aims to maximize profits through planning, coordination, accountability, and correction of weaknesses.
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Budget and Budgetary Control related to managerial accounting
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Leverage refers to using debt or fixed costs to amplify returns. It is the relationship between equity capital and fixed-interest bearing securities. Leverage can be financial, operating, or tax leverage. Financial leverage looks at the relationship between earnings on equity capital versus interest costs on debt. Operating leverage examines how fixed costs affect operating income with changes in sales. Tax leverage establishes the relationship between contributions and taxable income to forecast sales impacts. Leverage is a tool that can increase profits but also increases financial risk, as fixed costs like interest reduce earnings in unfavorable conditions.
FM_Financing Decision_Unit.2 Updated.pptx
The document discusses financing decisions and capital structure. It defines key terms like capital, capitalization, capital structure, sources of long-term funds and their merits and demerits.
The main sources of long-term funds discussed are equity shares, retained earnings, preference shares, debentures, term loans, public deposits, and innovative sources like lease financing, project finance, venture capital and bridge finance.
The document also discusses factors influencing capital structure like leverage, EBIT, EPS and the balance between debt and equity to maximize value while minimizing cost of capital.
Cost of Capital.pptx
Cost of capital is the minimum rate of return a company must earn before generating value. It is calculated by a business's accounting department to determine financial risk and whether an investment is justified. There are different components that make up a company's overall cost of capital, including the cost of debt, equity, preference shares, and retained earnings. These costs are weighted and combined to calculate the weighted average cost of capital, which is used to evaluate potential investments.
PPT6.pptx
The document discusses the objectives of financial management. There are two main objectives: 1) Profit maximization, which focuses on increasing a company's short-term profits without considering risks. 2) Wealth maximization, which focuses on increasing long-term value for stakeholders by considering risks and uncertainty. Wealth maximization helps increase a company's overall worth and market share, while profit maximization focuses on efficient day-to-day operations.
PPT5.pptx
Financial planning involves establishing objectives, formulating policies, forecasting, and procedures. There are two main types of financial planning: long term plans which focus on goals years into the future, and short term plans which focus on more immediate goals within a year or less.
PPT4.pptx
This document discusses the meaning, objectives, importance, and principles of financial planning. Financial planning is the process of estimating capital requirements and determining sources of funds. The objectives of financial planning include having adequate funds, balancing costs and risks, flexibility, simplicity, long-term views, and liquidity. Principles of financial planning are simplicity, clear objectives, less dependence on outside sources, flexibility, solvency, liquidity, cost, and profitability. Key considerations in formulating a financial plan are the nature of the industry, standing of the concern, future plans, availability of sources, general economic conditions, and government controls. The steps in financial planning are establishing financial objectives, formulating financial policies, formulating procedures, and
PPT2.pptx
The functions of a financial manager include:
1. Estimating financial requirements, selecting sources of funds, allocating funds, analyzing financial performance, capital budgeting, working capital management, profit planning and control, providing fair returns to investors, and maintaining liquidity and maximizing wealth.
2. Selecting the right sources of funds at the right time and cost, such as equity, debt, or preferred shares.
3. Distributing funds between capital and operating expenditures and evaluating investment proposals.
PPT1.pptx
Financial management is important for businesses because resources are limited but wants are unlimited. This document introduces financial management, covering its objectives, scope, and significance. It defines financial management as planning, organizing, directing, and controlling the financial activities of procuring and using enterprise funds efficiently to accomplish organizational objectives.
FINANCIAL FORECASTING.pptx
Financial forecasting involves using historical performance data like revenue, expenses, and sales to predict a company's future financial performance. There are two primary categories of forecasting methods: quantitative and qualitative. Quantitative methods use mathematical calculations and include percent of sales forecasting, straight line forecasting, moving average, simple linear regression, and multiple linear regression. Qualitative methods rely more on expert opinions and include the Delphi method and market research.
Valuation of shares.pptx
Valuation of shares is needed for amalgamation, when shares are used as loan security, and when preference shares or debentures are converted to equity shares. The valuation is affected by factors like the nature of the business, demand and supply of shares, government policy, company performance and growth prospects, management, economic climate, reserves, and dividend history.
Valuation of shares...pptx
This document discusses three methods for valuing shares:
1. Net assets basis (or intrinsic value) method which values shares based on a company's net tangible assets.
2. Yield basis method which values shares based on expected future profits available to equity shareholders and normal rates of return.
3. Dual (or fair value) method which takes the average of the net assets basis and yield basis methods to determine the fair value of shares.
Valuation of Goodwill.pptx
Goodwill is an intangible asset that represents the value of a business above its identifiable net assets, such as its name, reputation, customer loyalty, and management quality. Factors that affect the valuation of goodwill include good public relations, regular customers, quality products at reasonable prices, strong management skills, a good business location, positive supplier relationships, and skilled employees. Goodwill is calculated as the difference between the purchase price paid for a business and the fair value of its identifiable net assets.
Unit 1-Lecture 1-Valuation of Goodwill.pptx
Goodwill refers to the extra value of a business beyond the net value of its tangible assets, representing the reputation and name recognition that the business has earned. Goodwill is an intangible asset that exists because of a firm's reputation and depends on several factors such as location, time in business, nature of the business, management efficiency, past and future profits, stability, and future prospects. Goodwill can be valued using different methods that take into account the specific circumstances for valuation.
Underwriting-of-shares...pptx
This document discusses underwriting of shares and debentures. It defines underwriters as individuals, partnerships, or companies that take responsibility for shares and debentures not subscribed to by the public or existing shareholders, and are paid an underwriting commission. Brokers are defined as procuring subscriptions but not taking responsibility for unsold shares/debentures, and are paid a brokerage fee rather than an underwriting commission. The document also addresses calculating underwriter liability and dividing unmarked applications.
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budgetory control.pptx
- 2. BUDGET: · A formal statement of the financial resources set aside for carrying out specific activities in a given period of time.· It helps to co-ordinate the activities of the organisation. A budget is basically a yardstick against which actual performance is measured and assessed. Control is provided by comparisons of actual results against budget plan. Departures from budget can then be investigated and the reasons for the differences can be divided into controllable and non-controllable factors. An example would be an advertising budget or sales force budget.
- 3. BUDGETARY CONTROL: A control technique whereby actual results are compared with budgets.· Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budgets.
- 4. ADVANTAGES Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces management to look ahead, to set out detailed plans for achieving the targets for each department, operation and (ideally) each manager, to anticipate and give the organisation purpose and direction.· Promotes coordination and communication. Clearly defines areas of responsibility. Requires managers of budget centres to be made responsible for the achievement of budget targets for the operations under their personal control. Provides a basis for performance appraisal (variance analysis). Enables remedial action to be taken as variances emerge. Motivates employees by participating in the setting of budgets. Improves the allocation of scarce resources.
- 5. CHARACTERISTICS OF A BUDGET · Participation: involve as many people as possible in drawing up a budget. · Comprehensiveness: embrace the whole organisation. · Standards: base it on established standards of performance. · Flexibility: allow for changing circumstances. · Feedback: constantly monitor performance. · Analysis of costs and revenues: this can be done on the basis of product lines, departments or cost centres.
- 6. TYPES OF BUDGETS a) Sales budget: this involves a realistic sales forecast. This is prepared in units of each product and also in sales value. Methods of sales forecasting include: · sales force opinions · market research · statistical methods (correlation analysis and examination of trends) · mathematical models.
- 7. TYPES OF BUDGETS b) Production budget: expressed in quantitative terms only and is geared to the sales budget. The production manager's duties include: · analysis of plant utilisation · work-in-progress budgets.
- 8. TYPES OF BUDGETS d) Labour budget: is both quantitative and financial. This is influenced by: · production requirements · man-hours available · grades of labour required · wage rates (union agreements) · the need for incentives
- 9. TYPES OF BUDGETS c) Raw materials and purchasing budget: · The materials usage budget is in quantities. · The materials purchases budget is both quantitative and financial.Factors influencing a) and b) include: · production requirements · planning stock levels · storage space · trends of material prices.
- 10. TYPES OF BUDGETS e) Cash budget: a cash plan for a defined period of time. It summarises monthly receipts and payments. Hence, it highlights monthly surpluses and deficits of actual cash. Its main uses are: · to maintain control over a firm's cash requirements, e.g. stock and debtors· to enable a firm to take precautionary measures and arrange in advance for investment and loan facilities whenever cash surpluses or deficits arises · to show the feasibility of management's plans in cash terms · to illustrate the financial impact of changes in management policy