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Budgeting & Budgetary Control Submitted by: (MBA I st SEM.) Chetna prasad Shikha pathak Chitra totwani Shilpi Panchal

Budget, Budgeting & budgetary control

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Presentation on Budget, Budgeting & Budgetary control Contents: 1) Budgeting [characteristics] 2) Budgetary control 3) Difference in budget, budgeting, budgetary control 4) Essentials in budgetary control 5) Requisites for budgetary control system 6) Merits & limitations 7) Zero-based budgeting 8) Difference in Traditional & Zero based budgeting.

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  • 1. Budgeting & BudgetaryControlSubmitted by:(MBA IstSEM.) Chetna prasad Shikha pathak Chitra totwani Shilpi Panchal

2. Contents Budgeting [characteristics] Budgetary control Difference in budget, budgeting, budgetary control Essentials in budgetary control Requisites for budgetary control system Merits & limitations Zero-based budgeting Difference in Traditional & Zero based budgeting. 3. Definition & Meaning of BudgetingA budget is a pre-determined statement ofmanagement policy during a given periodwhich provides a standard for comparisonwith the results actually.-Brown & HowardBudgeting is a preparation of comprehensiveoperating and financial plans for specificintervals of time-Shilinglaw 4. Characteristics of good Budgeting. Good budgeting should involve persons at different levels whilepreparing the budgets. There should be proper fixation of authority and responsibility.. The target of budget should be realistic, if targets are difficult tobe achieved then they will not enthuse the persons concerned A good accounting system is also essential to make thebudgeting successful.. Budgeting system should have whole hearted support of the topmanagement. The employees should be imparted budgeting education. 5. Definition & meaning ofBudgetary ControlBudgetary control is a system which usesbudgets as a means of planning andcontrolling all aspects of producing/sellingcommodities or services-J BattyA budget is a means and budgetary control isthe end result 6. Essentials of Budgetary ControlOrganization for budgetary control.Budget centersBudget officers/committeeBudget manualBudget period 7. Organization chart for BudgetaryControlChiefExecutiveBudgetOfficerBudgetcommitteeProductionmanagerSalesmanagerFinancemanagerAccountsmanagerPersonnelmanagerResearch &developmentmanager 8. Requisites for Budgetary ControlSystemClarifying objectivesProper delegation of authority & responsibilityProper communication & budget education systemParticipation of all employeesMotivation & flexibility 9. Budgetary controlAdvantagesTool for measuringperformanceProvides specific aimsCreates budget consciousnessIntroduction of incentiveschemeLimitationsUncertain future, revisionrequiredDiscourages efficient personsProblem of co-ordinationConflict in departmentsTo make COST accounting Depends on Top managementmore reliable 10. Difference in Budget, Budgeting, &Budgetary Control.Budgets are business estimates for futureperiod, budgeting is the process of preparingthese estimates while budgetary control is asystem of achieving performance on the basisof budgets.Budget and budgeting are the parts ofplanning whereas as budgetary control islinked with co-ordination & control. 11. Zero-Base Budgeting Zero base budgeting is the latest technique of budgeting &it has an increased use of management tools. In zero base budgeting every year is taken as a new yearand previous year is not taken as a base. It enables management to allocate funds. It improves efficiency of management and make optimumuse of resources. Helpful in identifying economical & wasteful areas. Related to organizational goals. 12. Process of Zero Base BudgetingDetermineObjectivesPlan ofactionPrioritizationof activitiesCostBenefitAnalysisApprove decisionpackage & FinalizeBudget 13. Zero Base BudgetingAdvantagesEfficient allocation ofresources.Optimum utilization ofresourcesEnhances capability ofManagers.Identifies & eliminates wastefuland obsolete operations.DisadvantagesNon financial matters cannot beconsidered for cost benefitanalysisDifficulty in process of ranking ofdecision packagesIt is time Consuming 14. Traditional v/s Zero BaseBudgetingTraditional Budgeting Zero Base Budgeting. It is accounting oriented. Its approach is monitoringtowards expenditure. Its focus is on increase anddecrease of expenditure. It is simple to read & prepare. Its method of preparation isbased on extrapolation. It is decision oriented. Its approach is towardsachievement of objectives. Its focus is on cost benefitanalysis. It is more complex.. Its preparation is based uponselection of decision package