![]() If there is a requirement, then only provisions are made otherwise, they are not considered. It avoids the tendency of taking the previous data as a base to work for the future. In other words, the budget for each item starts from zero costs are calculated afresh based on the requirements for the budget period. If they are important, they will be considered or otherwise they are dropped. Top level management delegates the authority to the production managers and empowers them so that they can achieve their targets.īudgetary control is defined as the process of formulating budgets for a future period and measuring the actual performance as against the budgets and taking remedial measures, if any, for effective performance. If the production manager has a budget of producing say 10,000 units for the month of January, his performance is evaluated based on the number of units produced during that particular period. It includes all the functions of the organisation and serves as a guide to all departmental heads and executives.īudget serves as a tool of planning and control. What is Budget: Meaning and Definitions, Objectives, Purpose, Features, Steps, Sales Budget, Zero Based Budgeting, Control Ratios, Limitations and More… What is Budget – Meaning and DefinitionsĪ master budget gives an approved summary of results expected from the proposed plan of operations. That means, the Budgets incorporate the forecasts about the sales revenue, expenses, purchases, etc. Bertizel has viewed the Budget as … a forecast, in detail, of the results of an officially recognized programme of operations based on the highest reasonable expected operating efficiency. ![]() This is a comprehensive definition of Budget which reveals some of the important features of a Budget. ![]() It may include income, expenditure and the employment of capital. The Chartered Institute of Management Accountants (CIMA), London has, therefore, defined Budget as a financial and/or quantitative statement prepared and approved prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective. However the word ‘Budget’ in the case of business enterprises refers to a plan in the form of quantitative and financial statements, of the firm about the work to be done by the executives and their officials. The word Budget is derived from a French word Bougette representing a leather pouch into which funds were appropriated to meet the anticipated expenses. Budget is a plan of operations to be carried out during a specified future period and this plan comprises all aspects of business activities and summarizes the result of carrying out this plan. ![]()
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