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Short note: Budgetary control

Short answer

Budgetary control is a managerial technique where budgets are prepared, actual performance compared, variances analyzed, and corrective action taken. Steps: set objectives, prepare budgets (sales, production, cost, cash, master), record actuals, compare, act. It aids planning, coordination, cost control, and performance measurement, but requires reliable estimates, time, and trained staff; can be inflexible if rigidly applied.

Write a short note on budgetary control.

Budgetary control is a technique of managerial control in which budgets are prepared for the future period, actual performance is recorded and compared with the budgets, variances are analysed, and corrective action is taken.

Steps

  1. Set the objectives and the budget period.
  2. Prepare the budgets for sales, production, cost and cash, and combine them into a master budget.
  3. Record actual results.
  4. Compare and find the variances.
  5. Take corrective action and revise the budgets if needed.

Objectives and advantages

  • Planning, coordination and control of activities.
  • Fixing responsibility and measuring performance.
  • Controlling cost, increasing efficiency and profit.

Limitations

  • Estimates may be wrong, so the budget may not be realistic.
  • Needs time, cost and trained staff.
  • Can make managers inflexible if used rigidly.
  • Does not replace management judgement.

✓ Answer checked by Claude Opus 5.5 (high effort)

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