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Budgetary Control

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Page 1: Budgetary Control

Budgetary Control

Page 2: Budgetary Control

A Budget is a financial and/or quantitative Statement, prepared prior to a defined period of time, of the policy to be pursued that period for the purpose

of attaining given Objective

Budget

Page 3: Budgetary Control

Budgetary Control

Budgetary Control is the establishmentBudgetary Control is the establishmentof Budgets relating to the responsibilitiesof Budgets relating to the responsibilitiesof executives of a policy and the continuousof executives of a policy and the continuouscomparison of the actual with the budgetedcomparison of the actual with the budgetedresults, either to secure by individual actionresults, either to secure by individual actionthe objective of the policy or to provide the objective of the policy or to provide basis for its revisionbasis for its revision

Page 4: Budgetary Control

Budgetary Control

Characteristics

Establishment of Budgets

Analysis Of Variation

Taking Remedial Action

Revision Of Budgets

Page 5: Budgetary Control

Budgetary Control

OBJECTIVESOBJECTIVES

Planning

Motivation

Communication

Control

Co-ordination

PerformanceEvaluation

Page 6: Budgetary Control

Budgetary Control

Preliminaries for InstallationPreliminaries for Installation

Creating Budget CentreCreating Budget Centre

Accounting RecordsAccounting Records

Organization Chart Organization Chart

Budget CommitteeBudget Committee

Budget ManualBudget Manual

Budget PeriodBudget Period

Key FactorKey Factor

Page 7: Budgetary Control

SALES BUDGET

Functional Budgets

PRODUCTION BUDGET

SELLING & DISTRIBUTION

ADMINISTRATION

R & DEVELOPMENT BUDGET

Page 8: Budgetary Control

PLANT UTILISATION

COST OF PRODUCTION

BUDGET

Material Labour Overheads

PRODUCTION BUDGET

Purchase

Page 9: Budgetary Control

CASH BUDGET

PERFORMANCE BUDGET

ZERO BASED BUDGET

FIXED-VARIABLE BUDGETS

Capital Expenditure

Other Budgets

Page 10: Budgetary Control

Capacity

Shortage of raw material

Skilled Labour

Working Capital Government restrictions

Sales (orders)

LABOUR HOURS

POWER SUPPLIERS

Key factor (limiting factor

Page 11: Budgetary Control

SALES BUDGET

PRODUCTS TERRITORIES CUSTOMERS SALESMEN MONTH ….QUARTER

HISTORICAL ANALYSIS REPORTS BY SALESMEN MARKET ANALYSIS of BUSINESS CONDITIONS SPECIAL CONDITIONS

Sales Budget

Page 12: Budgetary Control

Period Product A Product B Product C Total

Units Amt

Rs.30 P.U.

Units AmtRs.

40 P.U.

Units AmtRs.20 P.U

Amt

(Rs)

Jan

Feb

March

Total

I Q

IIQ

III Q

IV Q

4,000

4,500

5,000

13,500

12,000

16,000

15,000

1.20

1.35

1.50

4.05

3.60

4.80

4.50

5,000

6,000

5,000

16,000

18,000

20,000

16,000

2.00

2.40

2.00

6.40

7.20

8.20

6.40

10,000

8,000

7,000

25,000

30,000

32,000

28,000

2.00

1.60

1.40

5.00

6.00

6.40

5.60

5.20

5.35

4.90

15.45

16.80

19.20

16.50

Total 56,500 16.95 70,000 28 115000 23 67.95

SALES BUDGET

Page 13: Budgetary Control

Budget Actual

Area Product Quantity Price Quantity

North A

B

10,000

6,000

10

5

11,500

7,000

South B 12,000 5 12,500

East A 15,000 10 16,500

West A

B

8,000

5,000

10

5

9,500

5,250

Sales Budget

Page 14: Budgetary Control

Area Product Budget June 30, 05 Budget June 30,04 Actual June 30,03

Q P V Q P V Q P V

North

South

East

West

Total

A

B

12,000

6,500

10

5

12,0000

32,500

10,000

6,000

10

5

1,00,000

30,000

11,500

7,000

10

5

1,15,000

35,000

Total 18,500 1,52,500 16,000 1,30,000 18,500 1,50,000

A

B

3,000

13,000

10

5

30,000

65,000

--

12,000

--

5

--

60,000

--

12,500 5

--

62,500

Total 16,000 95,000 12,000 60,000 12,500 62,500

A

B

17,000

5,000

10

5

1,70,000

25,000

15,000

--

10

--

1,50,000

--

16,500

--

10

--

1,65,000

--

Total 22,000 1,95,000 15,000 1,50,000 16,500 1,65,000

A

B

9,000

5,500

10

5

90,000

27,500

8,000

5,000

10

5

80,000

25,000

9,500

5,250

10

5

95,000

26,250

Total 14,500 1,17,500 13,000 1,05,000 14,750 1,21,250

A

B

41,000

30,000

10

5

4,10,000

1,50,000

33,000

23,000

10

5

3,30,000

1,15,000

37,500

24,750

10

5

3,75,000

1,23,750

Total 71,000 5,60,000 56,000 4,45,000 62,250 4,98,750

Page 15: Budgetary Control

PRODUCTION BUDGET

Sales Budget

Production Capacity

Stock Requirements

Products Manufacturing Departments

Months

BASED

UPON

CLASSIFIED

Production Budgets

Page 16: Budgetary Control

Product A

Req. To Fulfill S. Prog. 41,000Forecast Cl. Stock 4,000

45,000

Fore cast op. stock 3,000 42,000

Add For Defectives 2 ½ % 1,050Quantity for Production 43,050

PRODUCTION BUDGET ….. JUNE 30,05

Jan :7050

Feb: 7000

Mar: 8000

Apr: 8000

May:8000

Jun: 5000

43,050

Page 17: Budgetary Control

PRODUCTION BUDGET FOR THE YEAR

PRODUCTION SALES

(UNITS)

CLOSING

STOCK

(UNITS)

OPENING STOCK

(UNITS)

PRODUCTION BUDGET

(UNITS)

1+2=3

1 2 3 4

X

Y

Z

4800

2400

2400

800

400

400

600

300

800

5,000

2,500

2,000

Page 18: Budgetary Control

Product Units Cost Centre A Cost Centre B

HRs. P.U.

Total M. Hrs.

No. of MAC.Req.

- - -

XYZ

5,0002,5002,000

2020030

1,50,0005,00,000

60,000

6020024

7010020

3,50,0002,50,000

40,000

14010016

7,10,000 284 6,40,000 256

MACHINE UTILIZATION BUDGET

Page 19: Budgetary Control

PRODUCTION COST BUDGETPRODUCT

MACHINE

ITEMS OF MAT

MATERIAL

LABOUR F.O.H.

QT. REQ. FOR PRODUCTION

RATE P.U.

COST

OPERATION

GRADE

HOURS

HOUSRLY RATE

COST

DEPT.

COST

TOTAL COST

COST P. U.

A 1234

12

XY

B 123

12

Z

C 123

1 XYZ

Total

Production Cost Budgets

Page 20: Budgetary Control

D. M.a.t. D. M. 11

D. M. 21

D. M. 31

D. Lab. DEPT. I

DEPT. II

DEPT. III

O. Variable cost

T. Variable Cost

Fixed Production OH.

DEPT. I (P.H. Rs)

DEPT. II (P. H. 3)

DEPT. III (P.H. 6)

Fixed P. O. H.

Product Cost

A.D. M. @ 20%

S. D. @ 40

Total Cost

Profit Selling price sales Qt.

A 15 Lakh /200

B. 10.80/216

C. 16.80 / 280

Products

A

Rs. P. Unit

B

Rs. P. Unit

C

Rs. P. Unit

10

-

5

-

40

5

24

36

-

15

10

12

3

45

5

4

6

60

5

6

9

25

10

15

20

20

15

50

20

18

12

80

10

6

24

95

10

9

36

50

100

20

40

40

120

24

48

55

150

30

60

160

40

192

24

240

40

200

7500

216

5000

280

6000

Page 21: Budgetary Control

PRODUCTION BUDGET

A B C

Sales Quantities

(+) Closing Stock

(-) Opening Stock

7500

2400

3000

5000

1600

2000

6000

2000

2500

Production Quantities 6,900 4,600 5,500

Product

A ( 6,900X5: 6900x5)

B (4600x10: 4600x5)

C (5500X12:500x9)

DM 11 DM 21 DM 31

34,500

--

66,000

--

46,000

42,500

34,500

23,000

--

1,00,500 95,500 57,500

MATERIAL USAGE BUDGET

Page 22: Budgetary Control

Materials

(+) Closing Stock

(-) Opening Stock

DM 11 DM 21 DM 31

100500

22050

24500

95500

18450

20500

57500

15750

17500

Purchase Units

Price P. Unit (Rs.)

Purchase (Value)

98,050

2

1,96,100

93,450

4

3,73,800

55,750

1

55,750

PURCHASE BUDGET

Page 23: Budgetary Control

Cash Budget

Cash Budget is a detailed estimateof Cash Receipts from all sourcesand Cash Payments for all purposesand the resultant Cash Balance during the budget period

Page 24: Budgetary Control

Cash Budget

Cash Budget For the Period…..Particulars Jan Feb Mar Total Rs Rs Rs RsOpening BalanceAdditions

Budgeted Net Profit Depreciations Provisions Sale Of Plants Issue Of Capital and Debentures Reduction in Debtors Reduction In stock Accrued Expenses Increase In Liabilities Total Additions Total Cash Available

Deductions Dividends Prepayments Capital Profit Increase in Stocks Increase in Debtors Decrease in Liabilities Total Deductions Cl Balance Of Cash

Page 25: Budgetary Control

ZBB - applications

1 Identifying decision Units

2 Listing programmes, activities of each DU

3 Setting goals of activities of each DU

4 Identifying alternatives of activities

5 Designing Decision Package

6 Evaluating & Ranking each DP

7 Allocating Resources according to priority

Page 26: Budgetary Control

ZBB -Cycle

Programmes &

Page 27: Budgetary Control

ZBB –Decision Packages

1 Mutually Exclusive

2 Incremental

Page 28: Budgetary Control

ZBB –Decision Packages

Page 29: Budgetary Control

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