Page 145 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting Pooja, Lovely Professional University

Notes Unit 8: Budgetary Control

CONTENTS

Objectives
Introduction
8.1 Meaning of Budgetary Control
8.2 Objectives of Budgetary Control
8.3 Types of Budgets
8.3.1 Production Budget
8.3.2 Materials/Purchase Budget
8.3.3 Sales Budget
8.3.4 Sales Overhead Budget
8.3.5 Cash Budget
8.4 Classification of the Budget in accordance with the Flexibility

8.4.1 Fixed Budget
8.4.2 Flexible Budget
8.5 Zero-base Budgeting (ZBB)
8.5.1 Steps involved Zero-base Budgeting

8.5.2 Benefits of Zero-base Budgeting
8.5.3 Criticism of Zero-based Budgeting
8.6 Summary
8.7 Keywords
8.8 Review Questions
8.9 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the meaning of budgetary control
Describe the objectives of budgetary control
Construct the different types of budgets

Introduction

Budget is an estimate prepared for definite future period either in terms of fi nancial or

non-financial terms. Budget is prepared for any course of action or business or state or Nation, as

a whole. The budget is usually expressed in terms of total volume.
According to ICMA, England, a budget is as follows “a fi nancial and or quantitative statement

prepared and approved prior to a defined period of time, of the policy to be pursed during the
period for the purpose of attaining a given objective.”

140 LOVELY PROFESSIONAL UNIVERSITY