Step 1

Budget is the monitory expression of business plans and financial policies to be pursued in the emerging future period of time. The term budget is associated with the estimated figures regarding sales, production, cost, profit, etc for future and it requires planning, co-ordination, control, etc. Preparing a budget may not be'very difficult but to prepare a budget which is very close to the actual figures is very important and requires a qualified, experienced staff.

Step 2

What is Budgetary Control ?

Budgetary control is defined by the Institute of Cost and Management Accountants (CIMA) as: "The establishment of budgets relating the responsibilities of executives to the requirements 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".
Budgetary control is the preparation of budgets relating to the responsibilities of executives to the requirement of a policy, and the continuous comparison of actual with budgeted figures.

Step 3

a) Establishment of budgets for each section of the organization and incorporating the functional budgets in summary or master budget consisting of a forecast or budgeted profit and loss account and balance sheet.

b) Recording of actual performance and continous comparison of the actual performances with that of the budget so as to determine the variances from the budget,

c) Ascertainment of reason for such variances and taking suitable actions to remedy the defects in order to achieve the objective under original policy or to provide a basis for its revision.

Step 4

Objective

For policy, planning and control the budgetary control is essential. The main objectives of budgetary control are:
1.To plan for future.
2.To have co-ordination among different departments activities.
3.To operate departments with efficiency, economy and perfectly.
4.Minimising of wastes and increase in profitability.
5.To anticipate capital expenditure for future.
6.Correction of deviations from the established standards.
7.Fixation of responsibilities of all people working in the company.
8.To centralize the control system.
9.To anticipate working capital for future.
10.To safeguards the assets and get maximum utility from them.
11.To reduce the cost both labour and over head and have a better gross and net profit.

Step 5

1.Maximisation of Profits 2.Co-ordination
3.Tool for measuring performance
4.Economy
5.Determining weaknesses
6.Specific targets
7.Corrective action
8.Consciousness
9.Revision of budgets 10? Timely decision
10.Timely decision
11.Efficiency
12.Measurements of departments performance
13.Reduces cost
14.Carrot and stick policy