The budgets will motivate the workers, depends purely on how the workers have been mentally and physically involved with the process of budgeting. Management typically uses a for this comparison. Budget officer: The work of budget officer is to control the budget administration. Abdullar 2006 pointed out that budget is a device intended to provide greater effectiveness in achieving organizational efficiency, the budget sets for priorities as well as levels of spending, ways of financing and spending and a plan for managing the funds. For example, the branch manager of a bank might discover that more counter clerks are needed to meet the five-minute customer-waiting standard set earlier. Everybody in the organisation should understand his role in achieving the budgeted targets.
Comparing budgets with actual operational results is referred to as budgetary control. It is the 24 11. Incremental budgeting is, by its nature, quick and easy to do and easily understood. Major objectives should be broken into departÂmental, sectional and individual objectives. A budget expresses in quantitative terms, an organizations objective and possible steps for achieving them. Integration of plans: Different plans must be properly balanced so that they support one another. Advantages of Budgetary Control : The budgetary control system help in fixing the goals for the organization as whole and concerted efforts are made for its achievements.
Advantages and Disadvantages of Budget and Budgetary Control Advantage: There are numbers of advantages to budget and budgetary control according to accounting reporting manual. When a man is now to the job, a supervisor will like to watch his work more closely than he would that of an experienced operator in the organisation. Hence, some companies carry out the full process every five years, but in that year the business can almost grind to a halt. H : Poor application of budget and budgetary control does not have any effect on the local government system H 1: Poor application of budget and budgetary control has effect in the local government system. A company that does no planning whatsoever chooses to deal with the future by default and can react to events only as they occur. Quality review should focus on production development and its quality factors. .
Reporting back During the year the management accountant will prepare statements, as quickly as possible after each operating period, in our example, each quarter, setting out the actual operating costs against the budgeted costs. This can cause a severe handicap for the business because the budget should be the first year of the long range plan. A list of objectives or goals of the organization for the following year should be prepared. Usage of Control :- Standard cost primarily helps management in controlling cost performance. Difference in Treatment of Variance :- in practical life, budget are taken to be the monetary ceiling. Carried out by each budget centre. Standard cost:- Standard cost is a scientifically predetermined cost, which is arrived at assuming a particular level of efficiency in utilization of material, labour, and indirect services.
Budgeting is an all inclusive management tool. Depends Upon Support of Top Management: Budgetary control system depends upon the support of top management. Â· Standards: base it on established standards of performance. The comparison of what happened the previous year, have organized budget around activities or functions. The budget represents an overall objective for the farm for the whole year ahead, expressed in financial terms.
Â· cash sales Â· payments by debtors Â· the sale of fixed assets Â· the issue of new shares Â· the receipt of interest and dividends from investments. Â· Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Budgetary control is introduced to state in figures an approved plan of 22 11. Limitations of Budgetary Control 1. It is always expressed in terms of money and quantity. We will send your complete project materials to your email 30 Mins after payment. Costs of goods or services are attached to each decision package on the basis of the level of production or service to be provided to produce defined outputs or outcomes.
Budgets and standards should be frequently reviewed and actual results are compared with appropriate standards. Its use provides a yardstick for comparison of actual cost performance. Management account defined budget as a plan quantified in monetary terms, prepared and approved prior to a definite period of time, +which usually show the planned income to be generated and or expenditure to be incurred during the period and the capital to be employed to attain a given objectives. Representation of Management's View : standard cost represents management vies of efficient operation and relevant expenditure. Some variances can be identified to a specific department and it is within that department's control to take corrective action. The budgeted targets are compared to actual results and deviations are determined.
Standard Costing is a managerial device, to determine efficiency and effectiveness of cost performance. Because you will not be able to know the , is it fully implemented. They state the objectives they anticipate to pursue over the period, and the plan of action through which to attain their objectives. Any deviations are analysed and suitable corrective actions are taken. Several medium range and short-range plans are required to implement policies and strategies.