26-06-2012, 03:42 PM
Budgeting and Budgetary control system
Budgeting and Budgetary control system.docx (Size: 370.63 KB / Downloads: 66)
RELEVANCE OF THE STUDY:
• Budgets and forecasts provide a feasibility analysis.
• They can help develop a business model, review your key assumptions, and identify resource and capital needs.
• Budgets and forecasts can be used to find funding.
• They demonstrate the potential of business to investors and lenders.
• Budgets and forecasts can also be used as a management tool.
• They can help you establish milestones and require accountability for accomplishing the milestones. They can help identify risks and show benchmarks. This will help the small business owner make the necessary adjustments to avoid the risks, to reach the milestones, and to measure up to benchmarks.
OBJECTIVE OF THE STUDY:
• To identify the problems and constraints involved in budgeting.
• To know process of budgeting practically.
• To know how everything ultimately relates to budget.
• To analyze the overall execution of budget.
• . To evaluate the budgetary control practices followed in Moser Baer India ltd.
• To make a prediction about capital expenditure for Moser Baer India ltd
NEED AND IMPORTANCE:
Budgetary control is a strong tool of business is to maximize profits. The management is therefore always trying to focus on the proper planning, effective coordination and control in order to maximize profits. There are various managerial tools and techniques useful for the management to plan and control business operations. Budget is also used for the management to plan and control business operations and it is widely used as a standard device of planning and control.
Budget provide as a valuable aid to management through planning, coordination and control. It is a tool which measures the managerial performance of an organization. It promotes good morale and generates harmony in the organization.
Also it promotes efficiency and facilities management by exceptions. It helps in promoting a feeling of cost consciousness among the employees in the organization.
On the other side, as a budget is based on estimates, it may or may not be true. It is not substitute of management because, the efficiency and utility of the budgetary system depends on the skill and experience of the management. It cannot be executed automatically because continuous efforts are necessary for the execution of the budget.
In case of the manufacturing organizations, the estimation about the future is very important for the production activities as huge amount of costs are invested in the same activity. Especially the medium scale manufacturing organizations have their key customers & these customers are the large scale manufacturing organizations.
The medium scale engineering industries are numerous. These types of industries manufacture their products as per the demands & requirements of the large scale industries (key customers). The large scale & continuous demand (& supply) is throughout the year. For this purpose, the production budget & budgetary control on the same function becomes very essential.
Through learning the budgetary control system in the production division, the said functional area can be studied in the lights of cost ascertainment & control, activities & the actual performance.
DESIGN OF THE STUDY:
RESEARCH METHODOLOGY:
The present study is mainly about the measuring the effectiveness of Budgeting and Budgetary control of Moser Baer India Ltd. and the following methodology was adopted:
1. Understanding the concept of budgeting.
2. Preparing budgeting reports.
3. Projection of budget for 2010-11 basing on assumptions.
4. Finding out the deviations between actual and estimated figures.
5. Giving the appropriate reasons for such variances.