In practice it means regularly comparing actual income or expenditure to planned income or expenditure to identify whether or not corrective action is required. For example most University departments are given annual chest budgets for general equipment. By regularly comparing actual expenditure on this budget to planned expenditure a department will be aware of whether a particular item can be afforded.
If the account is in deficit a department will need to identify an alternative source of funds e. This process of monitoring expenditure and taking appropriate action is known as budgetary control. Search site. International students Continuing education Executive and professional education Courses in education.
Research at Cambridge. Preliminary B. Heads of Department C. Contract Execution and Commencement D. Income and Expenditure E. Investment and Borrowing F. Budgetary control does not merely involve the matching of estimated expenses to actual expenses. In addition, it involves placing responsibility for failures. The periodic checking up of income, costs, and expenses related to the administration of the budget is known as budgetary control. The main objectives of budgetary control are as follows: 1.
Production efficiency. Budgetary control is a technique marked by advanced planning for the effective use of materials. Thus, it leads to smooth production chains. Success of costing records. Budgetary control improves the utility of cost accounts, which provides knowledge about future costs.
Hence, cost variations can be minimized. Future planning. Every producer plans a definite output for a specific period for which it is possible to use budgets to estimate the required amount of finance, materials, labor, and other expenditures. Cost control. Budgetary control is useful for cost control because the production process rotates around predetermined targets.
Here, actual costs are compared to budgeted costs and any variations are corrected by the management. Helpful in policy framing. Budgeting provides a tool through which basic policies are periodically examined, restated, and established as guidelines for the entire organization. Budgets are solutions to basic problems. Why not share! Embed Size px. Start on. Show related SlideShares at end.
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