Budgetary Control:

The Institute of Cost and Management defines it as the establishment of budgets relating the responsibilities of executives to the requirement of a policy, and the continuous comparison of actual with budgeted results, either to secure by individual action the objective of that policy or to provide a basis for its revision. Thus budgetary control involves the use of budgets and budgetary reports throughout the period of budget to co-ordinate, evaluate and control day-to-day operations in accordance with the goals specified and with constant checking and evaluation of actual with desired goals.

Objectives:
1. To compel planning: Management forced to look ahead, set targets, anticipate problems to give organization mission and direction. 2. To communicate ideas and plans: Making each people aware of what he is supposed to be doing 3. To coordinate activities of different departments of the organization. Eg- the purchasing dept should base its budget on production requirements and the Production budget should in turn be based on sales expectations. 4. To establish a system of control: by having a plan against actual results which can be compared. 5. To motivate employees: to improve their performances.

Fund Flow statement:

Def by FoulkeA statement of sources and application of funds is a technical device
designed to analyse the changes in the financial condition of a business enterprise between two dates. Fund flow statement is prepared to study the changes in the financial position of a business over a period of time generally 1 year. It reveals both inflow and outflow of funds. The inflows are known as Sources of Funds whereas Outflow means Use or Application f Funds. It determines the financial consequences of business operations. It gives detailed analysis of changes in the distribution of resources between two balance-sheet days. Thus Fund flow statements, in general, are able to present that information which either is not available or not readily apparent from an analysis of other financial statements. It is widely used as a toll by financial executives for analyzing the financial performance of a business concern.

Prime Cost of Production: (Direct material + Direct Wage + Direct Expense)

Direct Material: It can be conveniently identified with and allocated to cost centres and cost
units. It refers to material out of which the product is manufactured. Eg- for manufacturing leather shoes leather is required, for producing butter milk is required etc. So they are the materials which are required directly for production.

Direct Wage: It can be conveniently identified with and allocated to cost centres and cost
units. It is the wage paid to the labourers who actually produce the goods. Incase of manual work, the worker himself is the wage earner but incase of machine-users, the persons who gives the inputs and collects the outputs or in whose account the output is credited, gets the wages.

Direct Expense: Expenses which are wholely or exclusively used necessary for a particular
production. They are direct in the sense as they can be easily identified with and allocated to the cost centres and cost units. Eg- there is an order for producing 1000 plastic balls with name of the company associated embossed over it..so the production unit has to prepare a Mould exclusively for this purpose, this a direct expense. Cost of preparing Blue-prints of production is also an example of a direct expense.
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