Page 134 - DCOM206_COST_ACCOUNTING_II

Unit 6: Budgetary Control

Flexible Budget: A flexible budget is also known as dynamic budget, sliding budget, variable Notes
budget, step or expenses control budget.
Long-term Budgets: When budgets are prepared for a period of 5 to 10 years these are called
long-term budget.

6.10 Review Questions

1. What is budgeting? What are the objectives of budgeting? Point out the advantages and
limitations of introducing budgetary control.
2. What are the objectives of budgetary control? Discuss the importance of functional budgets
in implementing budgetary control.

3. What is budgetary control? Explain briefly the salient features of sales budget, production
budget, cash budget and flexible budget.
4. What is the purpose served by the introduction of a budgetary control system in any
organisation having manufacturing and selling activities?
5. How would you proceed to frame budgets for research and development costs? What
difficulties are normally faced?
6. What do you understand by a flexible budget? Under what circumstances would you
recommend flexible budgeting?
7. What is performance budgeting? Enumerate steps in performance budgeting and its
advantages.

8. Describe performance budgeting. How it is different from the conventional system of
budgeting? Set out the main features of performance budgeting.
9. Describe the role of cash budgeting in ensuring overall financial management in a
manufacturing cum-selling enterprise.
10. What is a cash budget? Give its importance. Also explain the different methods of preparing
cash budget. Give an imaginary proforma of it.

Answers: Self Assessment

1. Budget 2. Budgeting
3. Planning 4. Budgetary control
5. Efficient 6. time-consuming
7. inflexibility 8. forecasts

9. Current 10. Sales
11. Cash 12. Fixed
13. Flexible 14. Budget
15. change

LOVELY PROFESSIONAL UNIVERSITY 129