Submitted by Bakhtawar Zahid

Roll no: M19MBA117

Assignment

Subject : Cost accounting

Submitted To: Sir Ammar

Question no 1:
Difference between budget and forecast?
Budget :
Budget is a financial expression of a business plan. In budgeting variance is done
to compare actual results. Budget usually set target for the future. Budget estimate
what business plan to achieve.
Forecast :
Forecast means estimation of future trends and outcomes , based on the past and
present data. In forecast variance analysis not done .Estimate what business will
achieve.
Question no 2:
What is budget and how it is related to control function?
According to Brown and Howard, “The budget is a pre-determined statement of
management policy during a given period which provides a standard for
comparison with the results actually achieved.”
It is a financial plan of a corporate for a specific future period of time. It is an
expression of income and expenditure of a specific period. It is a system which is
related to plan and control. 
Budgeting:
Budgeting represents the formation of the budget with the help and coordination of
all or the various departments of the firm
Budgetary Control:

Budgetary control is not merely matching of estimated expenses to actual expenses

but also related to place the responsibility for failure. The periodic checking up of
income, costs and expenses related to the administration of the budget is known as
budgetary control.
Budgetary control helps in coordinating the economic trends, financial position,
policies, plans, and actions of an organization.
In a narrow sense, budgetary control is a technique of controlling costs which
includes budget wherein comparison is made between actual cost to budgeted cost
and thus aimed at profit. No doubt budget is a plan which covers all functional
areas of a business for a specific future period of time.
Question no 3:
Define ?
Sale budget :
Sale budget is also known as revenue budget. It is the realistic sales estimate based
on analyses of past sales and the present market. Sale volume of sale budget is
based on sale forecast.
Formula to calculate sale budget:
Budgeted sale units multiply by expected price per unit.
Production budget:
The master plan from which details concerning materials requirements are
developed. Usually a list of units required to meet the sales budget considering
beginning inventory and desire ending inventory.
Direct Labor budget:
Direct labor budget shows the total direct labor cost and number of direct labor
hours needed for production. It helps the management to plan its labor force
requirements. Direct labor budget is a component of master budget. It is prepared
after the preparation of production budget because the budgeted production in units
figure provided by the production budget serves as starting point in direct labor
budget.
Direct Material Purchases Budget

The direct materials budget calculates the materials that must be purchased, by
time period, in order to fulfill the requirements of the production budget.
Direct material purchases budget shows budgeted beginning and ending direct
material inventory, the quantity of direct material that will be used in production,
the amount of direct material that must be purchased and its cost during a specific
period.
Factory Overhead budget:
The factory overhead budget shows all the planned manufacturing costs which are
needed to produce the budgeted production level of a period, other than direct costs
which are already covered under direct material budget and direct labor budget.
The overhead budget is an operational budget contained in the master budget of a
business.