Budgetary control is a continuous process which helps in planning and coordination. Plagiarism Prevention 5. Budget should specify units to be produced, broken down into sizes and styles, as well as cost of production. True. Budgets of the various functions are interlinked and dependent. Production efficiency.Budgetary control is such a technique which plans in advance regarding the effective use of material quantity. The following are the main objectives of budgetary control: 1. Meaning and Definition of Budgetary Control 2. This is achieved through planning, coordination and control of various activities in a programmed manner. The accounting system should provide the required information in time. Centralizing the control system.7. Purpose and Objectives of Budgeting 3. Specific Aims: 4. Correction of Performance Continuously: The deviations of actual performance compared with budgets are frequently reported and corrections are made to rectify the unfavourable deviations immediately. Budgetary control is a system of controlling cost which includes preparation of Budgets coordinating the departments and establishing responsibilities comparing performance with budgeted and acting upon results to achieve the maximum profitable. Terms of Service 7. Thus budget is a means and budgetary control is the end result. 2. 2. Thus, the performance of the department heads and other executives is constantly monitored. Emphasis on co-ordination and cooperation helps in achieving the predetermined targets and goals. To operate various cost centers and departments with efficiency and economy. Actual performance is compared with standards and deviations are reported to top management for action against unfavourable deviations. Staff are to be appraised of the budgets and benefits they are going to derive directly and indirectly. Objectives of budgetary control: Planning: A budget provides a comprehensive plan of action for activities over a definite period of time. Objectives of Budgetary Control: The main purpose of budgetary control is to enable the management to conduct the business in the most efficient manner in the organisation. Budget, Budgeting, and Budgetary Control: A budget is a blueprint of a plan expressed in quantitative terms. Effective budgetary control results in cost control and cost reduction. Budgetary control is inevitable for policy formulation, planning, control and coordination. 3. Forecasting may not be accurate. To achieve this aim, a proper planning and co ... 2. (2)Communication of ideas & plans: Communication of ideas & plans to everyone is affected by budgetary control. The objective of budget and budgetary control is to reduce the cost and maximize the profit. Introduction of Incentive Schemes of Remuneration: Incentive schemes can be easily introduced as the predetermined targets act as base to compare actual performance and determine efficiency. Meaning and Definition of Budgetary Control. This will make the departmental heads to be selfish to get maximum funds and think in terms of achieving their own set targets, thereby raising conflict among different departments. The primary objective of budgetary control is to help the management in systematic planning and in controlling the operations of the enterprise. If there is change in conditions budgets also should be adjusted to accommodate the changes. the budget can be used to monitor and control An important reason for producing a budget is that management is able to use budgetary control to monitor and compare the actual results (see diagram below). Participation of All Departments Concerned: Budgets are to be set for all the departments so that their participation in implementation will be effective. -A budget key factor should be assessed before preparing other functional budgets to ensure … Wheldon characterises budgetary control as planning in advance of the various functions of a business so that the business as a whole is controlled. The main objectives of budgetary control are to plan and control the activities of a business and promote coordination, communication, motivation and evaluation. (a) Planning: All business activities are preceded by planning. 7. Thus; a smooth chain of production will continue. Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budgets.