BUDGET, BUDGETING & BUDGETARY CONTROL:
1. BUDGET: A budget is a blue print of a plan expressed in quantitative terms.
2. BUDGETING: is technique for formulating budgets.
3. BUDGETARY CONTROL: refers to the principles, procedures & practices of achieving given objectives through budgets.
REQUISITIES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM:
Clarifying objectives.
Proper Delegation & Responsibility.
Proper Communication System.
Budget Education.
Participation of All Employees.
Flexibility.
Motivation.
1. CLARIFYING OBJECTIVES
Objectives must be clearly spelt out.
In the absence of clear goals, the budgets will also be unrealistic.
2. PROPER DELEGATION OF AUTHORITY & RESPONSIBILITY
Involve every level of management.
Finalized by the top management.
3. PROPER COMMUNICATION SYSTEM
Information regarding budgets should be quick
4. BUDGET EDUCATION
Employees should be properly educated.
Educated about the role.
BC is not a control device should be used as a tool to improve their efficiency
5. PARTICIPATION OF ALL EMPLOYEES
For every segment of the business.
Require active participation & involvement all employees.
On the basis of past experiences.
6. FLEXIBILITY
Budgets are prepared for the future, which is always uncertain.
Flexibility will make the budgets more appropriate and realistic.
7. MOTIVATION
Implemented by the human beings.
Successful budgets depend upon the interest shown by the employees.
All persons should be motivated.
CLASSIFICATION & TYPES OF BUDGETS:
A. CLASSIFICATION ACCORDING TO TIME:
1. Long-term budgets.
2. Short-term budgets.
3. Current budgets.
B. CLASSIFICATION ON THE BASIS OF FUNCTIONS:
1. Operating Budgets.
2. Financial Budgets.
3. Master Budgets.
CLASSIFICATION ACCORDING TO TIME:
LONG-TERM BUDGETS:
Represent long term planning of the business.
Done by the top-management.
Not known to lower-levels of management.
Lt’s are prepared such as CB, R&D & LTF.
SHORT-TERM BUDGETS:
Generally for one or two years.
Consumer goods industries like Sugar, cotton, textile etc
CURRENT BUDGETS:
Budgets is generally of months and weeks.
Current activities of the business.
CLASSIFICATION ACCORDING TO THE FUNCTIONS:
OPERATING BUDGETS:
Sales budget.
Production budget.
Production cost budget.
Purchase budget.
Raw material budget.
Labour budget.
Manufacturing expenses.
Administrative & selling expenses, budget.
PROGRAMME BUDGET:
Expected revenue &
Costs of various products or projects.
Budget can be prepared for each product line or project showing revenues.
PB useful in locating areas where efforts may be required to reduce costs & increase revenues.
FINANCIAL & MASTER BUDGET
FINANCIAL BUDGET
Cash Budget.
Working Capital Budget.
Capital Expenditure.
Income statement budget.
Balance Sheet
MASTER BUDGET:
Various functional budget are integrated into master budget.
ZERO BASED BUDGETING:
At the time of preparation of annual budget, a base is determined from which the budgeting process is started.
Sunday, December 26, 2010
Budgetary Conrol
BUDGET, BUDGETING & BUDGETARY CONTROL:
1. BUDGET: A budget is a blue print of a plan expressed in quantitative terms.
2. BUDGETING: is technique for formulating budgets.
3. BUDGETARY CONTROL: refers to the principles, procedures & practices of achieving given objectives through budgets.
REQUISITIES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM:
Clarifying objectives.
Proper Delegation & Responsibility.
Proper Communication System.
Budget Education.
Participation of All Employees.
Flexibility.
Motivation.
1. CLARIFYING OBJECTIVES
Objectives must be clearly spelt out.
In the absence of clear goals, the budgets will also be unrealistic.
2. PROPER DELEGATION OF AUTHORITY & RESPONSIBILITY
Involve every level of management.
Finalized by the top management.
3. PROPER COMMUNICATION SYSTEM
Information regarding budgets should be quick
4. BUDGET EDUCATION
Employees should be properly educated.
Educated about the role.
BC is not a control device should be used as a tool to improve their efficiency
5. PARTICIPATION OF ALL EMPLOYEES
For every segment of the business.
Require active participation & involvement all employees.
On the basis of past experiences.
6. FLEXIBILITY
Budgets are prepared for the future, which is always uncertain.
Flexibility will make the budgets more appropriate and realistic.
7. MOTIVATION
Implemented by the human beings.
Successful budgets depend upon the interest shown by the employees.
All persons should be motivated.
CLASSIFICATION & TYPES OF BUDGETS:
A. CLASSIFICATION ACCORDING TO TIME:
1. Long-term budgets.
2. Short-term budgets.
3. Current budgets.
B. CLASSIFICATION ON THE BASIS OF FUNCTIONS:
1. Operating Budgets.
2. Financial Budgets.
3. Master Budgets.
CLASSIFICATION ACCORDING TO TIME:
LONG-TERM BUDGETS:
Represent long term planning of the business.
Done by the top-management.
Not known to lower-levels of management.
Lt’s are prepared such as CB, R&D & LTF.
SHORT-TERM BUDGETS:
Generally for one or two years.
Consumer goods industries like Sugar, cotton, textile etc
CURRENT BUDGETS:
Budgets is generally of months and weeks.
Current activities of the business.
CLASSIFICATION ACCORDING TO THE FUNCTIONS:
OPERATING BUDGETS:
Sales budget.
Production budget.
Production cost budget.
Purchase budget.
Raw material budget.
Labour budget.
Manufacturing expenses.
Administrative & selling expenses, budget.
PROGRAMME BUDGET:
Expected revenue &
Costs of various products or projects.
Budget can be prepared for each product line or project showing revenues.
PB useful in locating areas where efforts may be required to reduce costs & increase revenues.
FINANCIAL & MASTER BUDGET
FINANCIAL BUDGET
Cash Budget.
Working Capital Budget.
Capital Expenditure.
Income statement budget.
Balance Sheet
MASTER BUDGET:
Various functional budget are integrated into master budget.
ZERO BASED BUDGETING:
At the time of preparation of annual budget, a base is determined from which the budgeting process is started.
1. BUDGET: A budget is a blue print of a plan expressed in quantitative terms.
2. BUDGETING: is technique for formulating budgets.
3. BUDGETARY CONTROL: refers to the principles, procedures & practices of achieving given objectives through budgets.
REQUISITIES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM:
Clarifying objectives.
Proper Delegation & Responsibility.
Proper Communication System.
Budget Education.
Participation of All Employees.
Flexibility.
Motivation.
1. CLARIFYING OBJECTIVES
Objectives must be clearly spelt out.
In the absence of clear goals, the budgets will also be unrealistic.
2. PROPER DELEGATION OF AUTHORITY & RESPONSIBILITY
Involve every level of management.
Finalized by the top management.
3. PROPER COMMUNICATION SYSTEM
Information regarding budgets should be quick
4. BUDGET EDUCATION
Employees should be properly educated.
Educated about the role.
BC is not a control device should be used as a tool to improve their efficiency
5. PARTICIPATION OF ALL EMPLOYEES
For every segment of the business.
Require active participation & involvement all employees.
On the basis of past experiences.
6. FLEXIBILITY
Budgets are prepared for the future, which is always uncertain.
Flexibility will make the budgets more appropriate and realistic.
7. MOTIVATION
Implemented by the human beings.
Successful budgets depend upon the interest shown by the employees.
All persons should be motivated.
CLASSIFICATION & TYPES OF BUDGETS:
A. CLASSIFICATION ACCORDING TO TIME:
1. Long-term budgets.
2. Short-term budgets.
3. Current budgets.
B. CLASSIFICATION ON THE BASIS OF FUNCTIONS:
1. Operating Budgets.
2. Financial Budgets.
3. Master Budgets.
CLASSIFICATION ACCORDING TO TIME:
LONG-TERM BUDGETS:
Represent long term planning of the business.
Done by the top-management.
Not known to lower-levels of management.
Lt’s are prepared such as CB, R&D & LTF.
SHORT-TERM BUDGETS:
Generally for one or two years.
Consumer goods industries like Sugar, cotton, textile etc
CURRENT BUDGETS:
Budgets is generally of months and weeks.
Current activities of the business.
CLASSIFICATION ACCORDING TO THE FUNCTIONS:
OPERATING BUDGETS:
Sales budget.
Production budget.
Production cost budget.
Purchase budget.
Raw material budget.
Labour budget.
Manufacturing expenses.
Administrative & selling expenses, budget.
PROGRAMME BUDGET:
Expected revenue &
Costs of various products or projects.
Budget can be prepared for each product line or project showing revenues.
PB useful in locating areas where efforts may be required to reduce costs & increase revenues.
FINANCIAL & MASTER BUDGET
FINANCIAL BUDGET
Cash Budget.
Working Capital Budget.
Capital Expenditure.
Income statement budget.
Balance Sheet
MASTER BUDGET:
Various functional budget are integrated into master budget.
ZERO BASED BUDGETING:
At the time of preparation of annual budget, a base is determined from which the budgeting process is started.
Interbational Organiation for standards ISO
The ISO 9000 series of standards is generic in scope. By design, the series can be tailored to fit any organizational needs, whether it is large or small, a manufacturer or a service organization. It can be applied to construction, engineering, health care, legal, and other professional services as well as the manufacturing of any thing front nuts and bolts to space craft.
It purpose is to unify quality terms and definitions used by industrialized nations and use those terms to demonstrate a supplier’s capability of controlling its processes.
ISO 9000:2000 – Quality management systems (QMS) – fundamentals and vocabulary discusses the fundamental concepts related to the QMS and provides the terminology used in the other two standards.
ISO 9001:2000 – Quality management systems (QMS) – requirements is the standard used for registration by demonstrating conformity of the QMS to customers, regulatory, and the organization’s own requirements.
ISO 9004:2000 - Quality Management Systems (QMS) – guidelines for performance improvement provides guideline that an organization can use to establish a QMS focused on improving performance.
It purpose is to unify quality terms and definitions used by industrialized nations and use those terms to demonstrate a supplier’s capability of controlling its processes.
ISO 9000:2000 – Quality management systems (QMS) – fundamentals and vocabulary discusses the fundamental concepts related to the QMS and provides the terminology used in the other two standards.
ISO 9001:2000 – Quality management systems (QMS) – requirements is the standard used for registration by demonstrating conformity of the QMS to customers, regulatory, and the organization’s own requirements.
ISO 9004:2000 - Quality Management Systems (QMS) – guidelines for performance improvement provides guideline that an organization can use to establish a QMS focused on improving performance.
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