Budgetary control

HideShow resource information
What are the benefits of budgetary control?
Planning-predicting future activities and highlights potential problems. Coordination-Budgets are integrated into a master budget. Control-comparisions made. Communication between managers and staff. Motivation. Evaluate performance. Decision making.
1 of 8
What are the limitations of budgetary control?
Benefits must exceed cos of creating budget, Accuracy-some inforation may distort the budget. Demotivating. Disfunctional management leading to rivalry. Set to easy-resources used less efficiently. Restrict activities-unaable to use oppertunities.
2 of 8
What is a budget?
A financial plan for a business, pepared in advance and generally covering a period of up to 12 months.
3 of 8
What are the different types of budget?
Sales, Production, Purchases, Labour, Trade Receivables, Trade Payables, Cash budget
4 of 8
What are the benefits of a production budget?
Identify production capacity available, Schedule resources effectively, Meet sales demand, Make best use of spare capacity.
5 of 8
What are the benefits of a labour budget?
Plan and control the cost of labur, Identify any surplus of shortfalls in the number of labour hours available allowing changes to shift times and overtime, Plan labour requirements for future production.
6 of 8
What are the beneifts of the cash budget?
Plan future expenditure, Control costs and revenue to avoid bank overdrafts, Reschedule payments to avoid borrowing, Coordinate various section of the business, communicate overall aims of the business, identify surpluses so it can be invested
7 of 8
What are the benefits of the master budget?
The forecast profit can be calculated and compared with previous years, Shows how changes in selling prices effect profit, Managers can take action and review selling price or sales volume, Actual profts can be compared with forecasts and differences
8 of 8

Other cards in this set

Card 2

Front

What are the limitations of budgetary control?

Back

Benefits must exceed cos of creating budget, Accuracy-some inforation may distort the budget. Demotivating. Disfunctional management leading to rivalry. Set to easy-resources used less efficiently. Restrict activities-unaable to use oppertunities.

Card 3

Front

What is a budget?

Back

Preview of the front of card 3

Card 4

Front

What are the different types of budget?

Back

Preview of the front of card 4

Card 5

Front

What are the benefits of a production budget?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Accounting resources:

See all Accounting resources »See all Budgets resources »