What is Budgetary Control? What are its characteristics?

What is Budgetary Control? What are its characteristics?


Budgetary Control is a methodical control technique whereby budgets are prepared relating the responsibilities of budget holders. It is a continuous comparison of actual results with budgeted results, to ensure that the objectives of the company’s policy are achieved; or to provide a basis for the change of those objectives. In simple terms, it is the analysis of the plans which the organisation has made; what was the result when those plans were implemented practically. After practical implementation of the budget if any variation is seen in the actual result to the budget result then the reasons for the variations are fount out and corrective actions are taken to correct variations.

Following are the characteristics of Budgetary control:

- It deals with the establishment of the budgets.

- A control technique where actual results are extracted from the organisation’s operations and compared with the budget prepared.

- Any differences or variations are computed and made the responsibility of key individual who can either take actions for maintain the favourable variations or revise the budgets.

What are the advantages of Budgetary Control?
Advantages of Budgetary Control - It is a powerful tool for the purpose of cost control and profit maximization…
What are the pre-requisites to implement Budgetary Control?
First a Budget Centre which is that section of the organisation for which the budget will be prepared should be clearly defined…
What are the major categories under which budgets are divided?
Sales/Marketing Budget, Production Budget, Finance Cash budget, Personnel budget…
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