Budgetary control, Objectives,

Merits
 Numerical statement expressing the plans ,
policies an goals of an organization for a definite
period in the future.

 According to CIMA, “A budget is a financial or

quantitative statement prepared prior to a defined
period of time , of the policy to be pursed during
that period for the purpose of attaining a given
objective”.
 It is applied to a system of management
accounting control by which all operations
and output are forecasted far ahead as
possible and actual results when known are
compared with the budget estimates.

 According to J.Batty “A system which uses

budgets as a means of planning and
controlling all aspects of producing and
selling commodities and service”
 Budgeting is a forward planning.

 It basically serves as a tool for management

control.
Objectives
 Budgeting and Planning
• Planning normally deals with Long term and short
goals and operations.
• The goals can be for the entire organization or
department wise or group wise or segment wise
to achieve the maximum results and operational
efficiency.
• In budgeting , planning means preparations of
budget in respect of sales, advertisement,
production, materials cost, labor cost, expenses,
financial plans.
 Budgeting and coordination
• Deals with the combined efforts of all the
people
• Individual and collective wisdom should be
considered.
• Each member of management should have
perfect and clear cut knowledge.
• There must be continuity to co ordination.
Budgeting and control
Controls signifies such systematic efforts which
help the management to know whether actual
performance is in line with predetermined goal,
policy and plans.

It is basically a measurement tool.

Summary of Objectives
Merits

1) It forces basic policies to initiatives.

2) The budgetary control aims at the
maximization of profit.
3) Reduction in cost and elimination in
efficiencies.
4) It brings to light the in efficiencies and
weakness on comparing actual performance
with the budget.
5) Budgetary control facilitates an integral and planned
forecast of the future.
6) Financial crisis can be avoided since budget provides
advance information.