assignment -2

Assignment No. 2

Group Name-Innovators

Topic- Budgetary Control

Group members:-

Mayank Arora (A) 48

Prerna Dewan (B) 107

Suman Kumari(C) 175

Introduction:-

Budget is a financial plan and a list of all the planned expense and revenues.

There are different types of budgets.

Budgetary control: - Budgetary control is the use of comprehensive system to aid management in carrying out its functions like planning, coordination and control.

This system involves functional basis division of departments into budget centres. Preparation of separate budget for each budget units. Consolidation of all functional budgets .comparison of actual level of performance against with proper analysis to provide for future course of action.

Suman Kumari (175) Sec –C

Discussion:-

Classification of budgets:-

1. Sales budget: This budget is the forecast of actual quantities and values of sales to be achieved in the budgeted period.

2. Production budget:-It involves planning the level of production.

3. Cost of the production budget: - This budget is a estimate of cost of output planned for a budget period

4. Purchase budget:-This budget provides information about the materials to be acquired from the market during the budget period.

5. Personnel budget:-This budget gives an estimate of the requirements of direct labour essential to meet the production budget.

6. Research and Development Budget: - This budget provides an estimate of expenditure to be incurred on R&D during the budget period.

7. Cash budget:-This budget gives the estimate of the anticipated receipts and payments of cash during the budget period.

8. Master budget:-The master budget is a summary of all fundamental budgets in capsule form available in one report.

9. Fixed budgeting: This is designed to remain unchanged irrespective of the volume of output or turnover attained.

Performance Budgeting:-These days budgets are established in such a way so that each item of the expenditure is related to specific responsibility centre and is closely linked with the performance of that standard.

Zero Based Budgeting:-

· The zero based budgeting is not based on the incremental approach and previous figures are not adopted as the base.

· Zero is taken on the base and a budget is developed on the basis of likely activities for the future period.

· It helps management to find activities on which spending money is worth with its priority criteria.

Responsibility accounting:-

Responsibility accounting fixes responsibility for cost control purposes by establishing responsibility centre namely:

a) cost centre

b) profit centre

c) investment centre

Principles of responsibility accounting:-

1. Fixation of targets for each responsibility centre

2. Actual performance is compared with the targets.

3. The Variance therein are analyzed so as to fix the responsibility of centre

4. Taking corrective actions.

Prerna Dewan (107) Sec - B

Conclusion:-

Future is uncertain .we need to plan our activities wisely to achieve our goals. Likewise budget preparation and budget implementation is a crucial phase in accounting system.

Comparison between actual performance and the budgeted performance will not be effective

Without continuous and proper reporting. Keep in mind that resources are limited and optimal utilization of resources is very important for survival of every entity.

Finally to ensure the success of budgetary control system, proper follow up action has to be Taken Immediately for the Reports Submitted.

Mayank Arora (48) Sec - A

Submitted to:-

Mr.Gurdeepak Singh