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Budget are the most important tools of profit ,planning & controlling.
4.
Budget
is a pre-determined statement of management policy during a given period ,that provides a standard for comparison with the results actually achieved.
Planning
Co-Ordination
Control
1) 2) 3) 4) 5) 6) 7) 8)
It ensures planning, on a long term basis. Its a tool of anticipating the requirements and expected performance of any firm. Co-ordinating activities of different departments. To efficiently operate different cost centres and departments. Elimination of wastes and increase in profits. To centralise the control system. Correction of deviations from the established standards. Fixation of responsibility of various individuals in an organization.
1)Involvement of each and every person 2)Proper fixation of authority and responsibilty 3)Targets should be realistic 4)Good system of accounting 5)Should have the support of top management 6)Employees should be imparted budgeting education 7)Proper reporting system
objectives
of all employees
Organization for budgetary control Budget centres Budget officers Budget manual Budget committee Budget period Determination of key factor
of profit
aims Tools for management performance Economy Determining weakness Corrective action Consciousness Reduces cost Introduction of incentive schemes
Budget
According to time
Long Short
Current
o Operation
Programme Responsibility
budget
Finanacial Master
budget
budget
It
is a summary of various functional budget Used to co-ordinate the activities of various functional departments and also to help as a control device Prepared by integrating various budget into one consolidated budget so as to represent the budgeted P&L a/c and the balance sheet
Sales
budget budget
Production
Cost
Cash The
of production budget
budget
Fixed budget (Prepared before the beginning of a financial year for a given level of activities)
Flexible budget (Defined as a budget which by recognising the difference between the fixed, semi-fixed and variable cost)
Budgeting
is a monetary or/and quantitative expression of business plans and policies to be pursued in future.
Forecasting
is needed for future planning and budgeting, it is also well-educated guess or inference as to what the future may be.
BUDGETING
Are planned events.
FORECASTING
Are merely welleducated estimate.
The production budget is prepared in relation to the sales budget. What is to be produced?
When is it to be produced?
The preparation of production budget involves the following stageProduction planning Consideration of plant capacity Stock quantity to be held Considering sales budget
Sales
budget is an estimate budget of expected sales during a budget period. A sales budget is known as a nerve centre or backbone of the enterprise.
There
are 6 points Past sales figures Assessment and reports by salesman Availability of raw material Seasonal fluctuations Availability of finance Plant capacity
cash budget is an estimate of cash received and disbursements during a future period of time.
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