Budget And Budgetary Control
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brought to you by Huzaifa Abdullah
A budget is a plan expressed in quantitative and money terms. Talks about the impact and implications of things in advance, and attempting to take control of situations in advance. Budgets can include some or all of income, expenditure, and the capital to be employed.
brought to you by Huzaifa budget can include non monetary as well as monetary Abdullah
Budgetary control relates to the continuous comparison of actual with budgeted results it does this to try to ensure that the objectives of that policy are achieved To provide a basis for the change of those objectives Budgetary control is the analysis of what happened when those plans came to be put into practice What the organization did or did not do to correct for any variations from these plans.
brought to you by Huzaifa Abdullah
Targets can be identified Motivation levels of managers increase. Communication between the workforce is enhanced. Problems can be identified and rectification can be
done before its is too late. Going through a budget a business can evaluate its performance. Businesses know their real position rather than expecting high profits.
brought to you by Huzaifa Abdullah
Any part of the organization for which the budget is
prepared. Most common example could be budget for sales
department is a budget centre. Similarly budget for purchase department is also a budget centre
brought to you by Huzaifa Abdullah
All aspects are connected with each other. Sales are production or purchase Similarly inflow and out flow of cash is related with sales
and purchase/production. Budgets cannot be prepared in isolation. All budget centers have to be well coordinated and
accurate for best results.
brought to you by Huzaifa Abdullah
The limiting factor is anything that limits the activity of
an entity. Examples of limiting factors are shortages of supply of a
resource and a restriction on sales at a particular price. the limiting factor is the one factor that dominates all
other factors Examples of limiting factors are: Cash Raw materials skilled labor Land Equipment
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
contr ol brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
The firm’s assessment of the coming season is that the weather will be hot and dry, and the demand for cricket bats will be high from June and for the rest of the season (until early September). After September, EA Sports will concentrate on overseas business (selling to agents in India, Australia, New Zealand and South Africa). Sales (units)
June 950
July August September October November December 950
750
600
600
500
600
Stocks at the end of any month is to be set at the level of 100 bats plus 20% of the number of bats scheduled to be sold in the following month. Required For the seven month period June to December 2009, prepare the stock and purchases budget and the sales budget: the selling price per bat is £20 and the purchase price per bat is £15. brought to you by Huzaifa Abdullah
The format is that we start the schedule with the opening stock, add purchases and subtract the closing stock to leave us with the sales amounts. Purchases Budget (Units): Cricket bats 2009
Balance b/d Purchases
Balance c/d Sales
June
July
August
Sept
Oct
Nov
Dec
290
290
250
220
220
200
220
950
910
720
600
580
520
640
1240
1200
970
820
800
720
860
290
250
220
220
200
220
260
950
950
750
600
600
500
600
1240
1200
970
820
800
720
860
brought to you by Huzaifa Abdullah
Stock Budget (£): Cricket bats
June
July
August
September
October
November
December
Opening stock
4350
4350
3750
3300
3300
3000
3300
Closing stock
4350
3750
3300
3300
3000
3300
3900
Sales budget (£): Cricket bats
June
July
August
September
October
November
December
Sales
19000
19000
15000
12000
12000
10000
12000
brought to you by Huzaifa Abdullah
A tour of new features
brought to you by Huzaifa Abdullah
A tour of new features
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
For this business, the sales plans and debtor’s details are as follows:
Month 1 24,000
Credit Sales Month 2 Month 3 22,000 30,000
Payment History of Debtors Which When They Pay How Many of Debtors Them Pay at This Time Debtors within the month of 50% 1 sale brought to you by Huzaifa Abdullah
24,000 X 50% = 24,000 X 0.5 = 12,000 For Month 2, Debtors 2 pay their share of the sales in Month 1 24,000 X 30% = 24,000 X 0.3 = 7,200 For Month 3, Debtors 3 pay their share of the sales in Month 1 brought to you by Huzaifa Abdullah 24,000 X 20% = 24,000 X 0.2 = 4,800
A budget is a plan expressed in quantitative and money terms. Talks about the impact and implications of things in advance, and attempting to take control of situations in advance. Budgets can include some or all of income, expenditure, and the capital to be employed.
brought to you by Huzaifa budget can include non monetary as well as monetary Abdullah
Budgetary control relates to the continuous comparison of actual with budgeted results it does this to try to ensure that the objectives of that policy are achieved To provide a basis for the change of those objectives Budgetary control is the analysis of what happened when those plans came to be put into practice What the organization did or did not do to correct for any variations from these plans.
brought to you by Huzaifa Abdullah
Targets can be identified Motivation levels of managers increase. Communication between the workforce is enhanced. Problems can be identified and rectification can be
done before its is too late. Going through a budget a business can evaluate its performance. Businesses know their real position rather than expecting high profits.
brought to you by Huzaifa Abdullah
Any part of the organization for which the budget is
prepared. Most common example could be budget for sales
department is a budget centre. Similarly budget for purchase department is also a budget centre
brought to you by Huzaifa Abdullah
All aspects are connected with each other. Sales are production or purchase Similarly inflow and out flow of cash is related with sales
and purchase/production. Budgets cannot be prepared in isolation. All budget centers have to be well coordinated and
accurate for best results.
brought to you by Huzaifa Abdullah
The limiting factor is anything that limits the activity of
an entity. Examples of limiting factors are shortages of supply of a
resource and a restriction on sales at a particular price. the limiting factor is the one factor that dominates all
other factors Examples of limiting factors are: Cash Raw materials skilled labor Land Equipment
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
contr ol brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
The firm’s assessment of the coming season is that the weather will be hot and dry, and the demand for cricket bats will be high from June and for the rest of the season (until early September). After September, EA Sports will concentrate on overseas business (selling to agents in India, Australia, New Zealand and South Africa). Sales (units)
June 950
July August September October November December 950
750
600
600
500
600
Stocks at the end of any month is to be set at the level of 100 bats plus 20% of the number of bats scheduled to be sold in the following month. Required For the seven month period June to December 2009, prepare the stock and purchases budget and the sales budget: the selling price per bat is £20 and the purchase price per bat is £15. brought to you by Huzaifa Abdullah
The format is that we start the schedule with the opening stock, add purchases and subtract the closing stock to leave us with the sales amounts. Purchases Budget (Units): Cricket bats 2009
Balance b/d Purchases
Balance c/d Sales
June
July
August
Sept
Oct
Nov
Dec
290
290
250
220
220
200
220
950
910
720
600
580
520
640
1240
1200
970
820
800
720
860
290
250
220
220
200
220
260
950
950
750
600
600
500
600
1240
1200
970
820
800
720
860
brought to you by Huzaifa Abdullah
Stock Budget (£): Cricket bats
June
July
August
September
October
November
December
Opening stock
4350
4350
3750
3300
3300
3000
3300
Closing stock
4350
3750
3300
3300
3000
3300
3900
Sales budget (£): Cricket bats
June
July
August
September
October
November
December
Sales
19000
19000
15000
12000
12000
10000
12000
brought to you by Huzaifa Abdullah
A tour of new features
brought to you by Huzaifa Abdullah
A tour of new features
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
brought to you by Huzaifa Abdullah
For this business, the sales plans and debtor’s details are as follows:
Month 1 24,000
Credit Sales Month 2 Month 3 22,000 30,000
Payment History of Debtors Which When They Pay How Many of Debtors Them Pay at This Time Debtors within the month of 50% 1 sale brought to you by Huzaifa Abdullah
24,000 X 50% = 24,000 X 0.5 = 12,000 For Month 2, Debtors 2 pay their share of the sales in Month 1 24,000 X 30% = 24,000 X 0.3 = 7,200 For Month 3, Debtors 3 pay their share of the sales in Month 1 brought to you by Huzaifa Abdullah 24,000 X 20% = 24,000 X 0.2 = 4,800
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