ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Budgetary control is a system of controlling costs which includes the preparation of budgets, co-ordination the departments and establishing responsibilities, comparing actual performance with the budgeted; and acting upon results to achieve maximum profitability.

Detailed explanation-2: -Budgetary control is known as setting up a particular budget by management to know the variation between the company’s actual performance and budgeted performance. It also helps managers utilize these budgets to monitor and control various costs within a particular accounting period.

Detailed explanation-3: -Setting standards to coordinate and control the budget process (policies and procedures). Recording and measuring current financial performance (preparing budgets). Making comparisons between actual and budgeted results (variance analysis). Taking appropriate corrective action as required.

Detailed explanation-4: -The objective of budgeting and budgetary control in a business organization includes; PLANNING-To produce detailed operational plan for the different sectors and facets of the organization. CO-ORDINATION-To bring together and reconcile into a common plan the actions of the different parts of the organization.