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BUSINESS AND ORGANISATION MANAGEMENT. Submitted to: Ms. Kriti. Submitted by: Akshita S harma (178) Karamjeet Kaur (156) Kanika Garg (154) B.COM 1 B. CONTROL TECHNIQUES. TRADITIONAL CONTROL TECHNIQUES. Production Planning and Control Inventory Control Break Even Analysis

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Submitted to:

Ms. Kriti

Submitted by:

Akshita Sharma (178)

KaramjeetKaur (156)

KanikaGarg (154)


Traditional control techniques


Production Planning and Control

Inventory Control

Break Even Analysis

Profit and Loss Control

Statistical Data Analysis


Cost Control


A Budget is the monetary or/and quantitative expansion of a business plans and politics to be pursued in the future periods of time .

The term budgeting is used for preparing budgets and others procedures for planning, co-ordination and control of business enterprises.


  • Sales Budget

  • Selling and distribution cost budget

  • Production budget

  • Cost of Production Budget

  • Material Budget

  • Manufacturing Overhead cost budget

  • Cash budget

  • Direct Labour Budget

Sales budget
Sales Budget

A sale budget is an estimate of expected sales during a budget period. A sale budget is known as a nerve centre or back-bone of the enterprise.

Degree of accuracy with which sales are estimated will determine the practicability of operating budgets.It is the starting point on which others budgets are based.

It lays down:

1.potential sales figures in value as well as in quantity.

2. comprehensive plan & programme for sales department.

Some factors are taken into account while preparing sales budget:-

Past sales figures

Assessment & reports by salesman

Availability of raw materials

Seasonal fluctuations

Availability of finances

Plant capacity

Selling and distribution cost budget
Selling and Distribution Cost Budget budget:-

It forecasts the cost of selling and distribution the products.

It depends upon the sales budget.

These expenses may be estimates per unit of sales or some percentage on sales etc.

Production budget
Production Budget budget:-

The production budget is prepared in relation to the sales budget . It is a forecast of the production for the budget period.

It is prepared for the number of units to be produced and also for the cost to be incurred on materials, labour and factory overheads.

Two considerations involved in it- a) what is to be produced? b) when is to be produced?

Preparation of production budget involves the following stages : 1. production planning 2. consideration of plant capacity 3. stock quantity to be sold 4. sales budget figures

Cost of production budget
Cost of Production Budget budget:-

The cost of production budget is the total amount to be spent on producing the units stipulated in the production budget.

The material cost, labour cost and overheads required for manufacturing are totalled together to make it a cost of production budget.

Materials budget
Materials Budget budget:-

It is concerned with determining the quantity of raw materials required for production. The materials are purchased as per the requirements of production department.

The rate of consumption of raw materials is also determined. The units of materials required multiplied by the rate per unit of raw materials will give us a figure of material cost.

The raw materials budget will serve the following purposes
The raw materials budget will serve the following purposes:- budget:-

The purchase department will be able to plan the purchase of raw materials at different times.

It will enable the fixation of minimum stock level, maximum stock level and re-ordering level.

The raw materials purchase budget will be determined

The budgeted cost of raw materials will be determined.

Direct labour budget
Direct Labour Budget budget:-

Labour is classified into: labour

2. indirect labour

The labour required for manufacturing the product is known as direct labour.

The labour which cannot be specific with production is called indirect labour.

Though two budgets may be prepared for direct and indirect labour but from costing point of view only direct budget is prepared.

The labour time needed for each job, process and operation is determined with the help of time and motion study.

T budget:-he rates of pay including all allowances are multiplied by labour time for calculating labour cost.

If labour incentive schemes are in operation then labour rates should be suitability increased. If piece-rate system for paying wages is in operation then labour cost will be calculated by multiplying budgeted units by the labour rate per unit.

It also helps in determining the finances required for labour.

Manufacturing overhead cost budget
Manufacturing Overhead Cost Budget budget:-

It is that part of works cost which from indirect labour, indirect materials, overheads and other factory expenses.

Manufacturing overheads cost may be classified into-

Fixed cost- It remains constant irrespective of output and is estimated on the basis of past experience.

ii) Variable cost- It is determined per unit of cost and is calculated by multiplying the rate per unit by budgeted output.

Cash budget
Cash Budget budget:-

It is an estimate of cash receipt and disbursements during a future period of time. It precedes other budgets. It is a forecast of expected cash intake and outlay.

The estimated cash collections from sales, debts, bills receivable, interests, dividends and other income & sales of investments and other assets will be taken into account.

The functional budgets may be adjusted according to the cash budget.

Budgetary control
Budgetary control budget:-

Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and then comparing the budgeted figures with the actual performance for calculating variances, if any.

The budgetary control is a control is a continuous process which helps in planning and co-ordination. A budget is a means and budgetary control is the end result.

Essentials of budgetary control
Essentials of budget:-Budgetary Control

Organisation for Budgetary control

Budget Centres

Budget Manual

Budget Officer

Budget Committee

Budget Period

Determination of key figure

Organisation for Budgetary Control budget:-–

Chief Executive

Budget Officer

Budget Committee

Production Sales Finance Accounts Personnel Research and

Manager Manager Manager Manager Manager Development


(a)Produc- (a)Sales (a)Receipts (a)Labour (a)Cost (a)Research and

tion Budget Budget Budget Budget Development

Budget (b) Advert- (b)Payments Budget

(b)Plant isement Budget

Utilisation Budget


2) budget:-Budget Centres– A budget centre is that part of organisation for which budget is prepared. It may be a department, section of department or any other part of the department.

3) Budget Manual - It is a document which spells out the duties and also responsibilities of various executives concerned with the budgets.

4) Budget Officer – He is empowered to scrutinise the budgets prepared by different functional heads and to make changes in that, if demand so.

5)Budget Committee – In large concerns this committee is responsible for preparation and implementation of budgets. Heads of all important are made members of this committee.

6 budget:-) Budget Period – It is length of time for which a budget is prepared and employed. Some factors are taken into account while fixing the period of budgets :

The types of budgets

The nature of demand for the products

The timings for the availability of the finances.

The economic situation of the country

The length of trade cycles.

7) Determination of Key Factor – A factor which influences all other budgets is known as Key Factor or Principal Factor. It also highlights the limitations of the enterprise.

Advantages of budgetary control
Advantages of Budgetary Control budget:-

Maximisation of Profits


Specific Aims

Tool for Measuring Performance


Determining Weakness

Corrective Action


Reduces Costs

Introduction of Incentive schemes

Limitations of budgetary control
Limitations of Budgetary Control budget:-

Uncertain Future

Budgetary Revision Required

Discourage Efficient Persons

Problem of Co-ordination

Conflict among Different Departments

Depends upon Support of Top Management

Cost control
Cost Control budget:-

Control of all the costs of an enterprise in order to achieve cost effectiveness in business operations. Cost can be classified as-

Fixed costs

Variable costs

Semi variable costs

Actual cost records are sent to the incharge of the product or activity. In case of any deviation in cost, immediate remedial measures are taken up. Regular cost control system will help in keeping cost under check.

Merits budget:-

Cost control system helps in discovering efficient and inefficient operations.

It provides valuable information for submitting tenders or quoting prices of products or services.

It helps in pinpointing the factors leading to losses and the reasons for variations in profit can be ascertained.

It helps in keeping a check on inventories. There will be proper system of receiving, storing, issuing and using of materials and other stores.

Cost records become a basis for planning future production policies.

Production planning and control
Production Planning and Control budget:-

Production planning and control is an important task of production manager. Production process is properly decided in advance and is carried out as per plan.

Production planning is the function of looking ahead, anticipating difficulties to be faced and likely remedial steps to remove the.

Production guides and directs flow of production so that products are manufactured in a best way and conform to planned schedule and are of the right quantity.

Techniques budget:-

Routing – It is the selection of path from where each unit will have to pass before reaching the final stage.

Scheduling – It is the determining of time and data when each operation is to be commenced and completed.

Dispatching (Implementation) – It refers to the process of actually ordering the work to be done.

Follow up and expediting – It is related to evaluation and appraisal of work performed.

Inspection – The purposes of inspection is to see whether the products manufactured are of requisite quality or not.

Inventory control
Inventory Control budget:-

Inventory control or materials management connotes controlling the kind, amount, location & timing of various commodities used in and produced by the industrial enterprises. Inventory control is exercised at three stages :-

Purchasing of materials

Storing of materials

Testing of materials

It can be exercised by establishing various parameters :-

Safety inventory level

Maximum inventory level

Re-ordering level

Danger level

Break e ven a nalysis
Break budget:-Even Analysis

This technique measures profits corresponding to the different levels of output. The study of cost-volume-profit relationship is frequently referred to as break even analysis.

The term break even analysis is used in two senses-narrow sense & broad sense. In its broad sense, break even analysis refers to the study of relationship between costs, volume and profit at different levels of sales or production.

In its narrow sense, it refers to a technique of determining that level of operations where total revenue is equal to total expenses.

Assumptions budget:-

All elements of cost i.e. production, administration and selling & distribution can be segregated into fixed and variable components.

Variable cost remains constant per unit of output and thus fluctuates directly in proportion to changes in the volume of output.

Fixed cost remains constant at all volumes of output.

Volume of production is the only factor that influences cost.

There is a synchronization between production and sales.

Break even point
Break even Point budget:-

It is a level of production at which revenue and costs (fixed & variable) are the same, at this point there is neither profit nor loss.


It is the difference between sales and variable cost or marginal cost of sales.

Profit volume ratio p v ratio
Profit / Volume ratio (P/V Ratio) budget:-

It reveals the effect on profit or changes in the volume. The concept of P/V ratio is useful to calculate the break even point, the profit at a given volume of sales, the sales volume required to earn a given profit and the volume of sales required to maintain the present profits if the selling price is reduced by a specified percentage. Break even point is an indicative of effectiveness and control.

Profit and Loss Control

It is a simple and commonly used overall control device to find out the immediate revenue or cost factors responsible for either the success or failure of an enterprise.

The sales, expenses and profit of different departments or for different products are compared with that of other departments or products. The department becomes a cost centre.

Statistical d ata a nalysis
Statistical budget:-Data Analysis

  • This analysis is possible by means of comparison of ratios, percentage, averages, trends etc. of different periods with a view to pinpoint deviations and causes.

  • The minimum and maximum control limits are fixed and deviations within these limits are allowed.

  • Statistical control charts are prepared with the help of collected data and permissible limits are plotted.

Return on investment roi
Return On Investment (ROI) budget:-

Thereturn on investment is computed by dividing the operating net profit by the capital employed in the concern . The following formula is used for this purpose:

ROI= Net Profit before Interest & Tax

Capital Employed

ROI is used to measure the overall efficiency of a concern. It reveals how well the resources of a concern are used, higher the return better are the results.

An important drawback of capital employed in a concern as this concept is open to conflicting interpretations.

Programme evaluation and review technique pert
Programme Evaluation and Review Technique(PERT) budget:-

PERT is useful at several stages of project management starting from early planning stages when various alternative programmes are being considered to the scheduling phase, when time and resources schedules are laid out, to final stage in operation, when used as control device to measure actual versus planned progress.

PERT uses ‘network’ as the basic tool of project management and is helpful in completing a project on schedule by co-ordinating different jobs involved in its completion.

Management information system mis
Management Information System (MIS) budget:-

MIS is an approach of providing timely, adequate and accurate information to the right person in the organisation which helps in taking right decisions.

MIS is of two types :

Management operating system meant for meeting the information needs of lower and middle level management.

Management reporting system which supplies information to top level management for decision making.

Management audit
Management Audit budget:-

It is an investigation by an independent organisation to find out whether the management is carried out most effectively or not. In case there are drawbacks at any level then recommendations should be given to improve managerial efficiency.


To see whether the work at all levels is undertaken efficiently or not.

If the management is not done effectively then suitable recommendations are made to tone it up.

Whether the plans and programmes are executed properly or not? And suggesting ways and means of increasing managerial efficiency.

Information technology
Information Technology budget:-

It is said that we are moving towards ‘Information Society’ in which majority of the labour force will be engaged in information processing and the use of information technology.

The growth of size business has necessitated the delegation of authority at various levels of management . There are problems of control, co-ordination and communication.

The decision making has become a difficult task. The decisions have wider ramifications for the business and a wrong decisions may lead to its closure.

Management needs full information before taking any decisions . Good decisions can minimize costs and optimise returns.

Expanding data base
Expanding Data Base budget:-

  • There is a need for non-accounting information about the external environment, such as social, economic, political and technical developments.

  • In addition, non-accounting information on internal operations is also required for managerial purposes.

  • This can be seen especially in relation to data on marketing, production and distribution, product cost, technological change, labour productivity etc.

Use of computers in handling information

Impact of Computers on Manager’s Work

The Lower Level Managers deal with day to day operations which may include inventory control, payroll, processing sales transactions and keeping track of employee work hours.

Middle Level Managers are required to co-ordinate, control and monitor various activities in an organisation and acts as liaison between operational managers and top managers.

Top Level Managers establish the vision and the long- term goals of the organisation and chart its overall course. Their decisions tend to be constructed.

Challenges created by information technology
Challenges created by information technology budget:-

Resistance to computer application


Speech recognition services

Computer networks

THANK YOU !! budget:-