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Unit 9: Budgetary Control

Notes
Figure 9.2

Budget Executives Budgets Prepared
1. Sales Director (i) Sales budget
(ii) Advertising budget
(iii) Distribution cost budget
2. Product Director (i) Production budget
(ii) Repairs and maintenance of plant budget
3. Purchase Director (i) Purchase budget
(ii) Materials budget
4. Personnel Director (i) Labour budget
5. Development Director (i) Development cost budget
(ii) Research budget
6. Finance Director (i) Cost budget
(ii) Cash budget
(iii) Master budget

Notes The finance director actually integrates all functional budgets and estimates the
requirement of working capital.
4. Budget Centre: A budget centre is a section of the organisation of the undertaking defined
for the purpose of budget control. Budget centre should be established for cost control and
all the budgets should be related to cost centres. Budget centres will disclose the sections
of the organisation where planned performance is not achieved. Budget centre must be
separately delimited because a separate budget has to be set with the help of the head of
the department concerned. To illustrate, production manager has to be consulted for the
preparation of production budget and finance manager for cash budget.
5. Budget Committee: In small companies, the budget is prepared by the cost accountant. But
in big companies, the budget is prepared by the committee. The budget committee consists
of the chief executive or managing director, budget officers and the managers of various
departments. The managers of various departments prepare their budgets and submit
them to this committee. The committee will make necessary adjustments, co-ordinate all
the budgets and prepare a master budget.

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