Page 148 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 7: Budgeting

Notes
Fixed Overheads
Depreciation 22,000 22,000 22,000
Insurance 6,000 6,000 6,000
Salaries 20,000 20,000 20,000
Total Overheads 1,15,900 1,24,000 1,32,100

Master Budget

Immediately after the completion of functional or departmental level budgets, the major

responsibility of the budget officer is to consolidate the various budgets together, which is

detailed report of all operations of the firm for a defi nite period.
Self Assessment

State whether the following statements are true or false:
9. Fixed budget is a budget known as constant budget.
10. Fixed budget is most useful tool of analysis in studying the sales at when the circumstances
are not warranting to predict.
11. Flexible budget is prepared for any level of production as an estimate of statement of all
expenses

7.4 Budgetary Control System

Budgetary control contains two different processes one is the preparation of the budget and
another one is the control of the prepared budget.
According to J. Batty, “Budgetary control is a system which uses budgets as a means of planning
and controlling all aspects of producing and/or selling commodities and services.”
According to ICMA, England, a budgetary control is, “the establishment of budgets relating to
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 objectives of that policy
or to provide a basis for its revision”.

Figure 7.5: Steps Involved in Budgetary Control
Preparation of the Budget for definite future

Actual performance has to be recorded

Comparison in between the actual and budget figures

Corrective steps Deviations in between Actual & Budget

Revision of the budget

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