QS Study

Budgetary Control

A budget is a formal written statement of management’s plans for a specified future time period, expressed in financial terms. Budgetary control refers to how well managers utilize budgets to monitor and control costs and operations in a given accounting period. As a student, your budget study time, and money, family’s budget income and expenses and business enterprise use budgets in planning and controlling their operations.

According to Brown and Howard, “Budgetary control is a system of controlling costs which includes the preparation of budgets, coordinating the departments and establishing responsibilities, comparing actual performance with the budgeted and acting upon results to achieve maximum profitability.”

Benefits of budgetary control: The benefits of budgetary control are summarized below:

  • Budgets communicate management’s plans throughout the organization.
  • It defines the goals, plans and policies of the enterprise.
  • It is a good guide to the management for making future plans.
  • It aims at maximization of profit through cost control and proper utilization of resources.
  • It is guided to the management in the field or research and development in future.
  • An effective system of budgetary control results in coordinated of all persons involved.
  • It facilitates an intelligent and planned forecast for the future.
  • It provides definite objectives for evaluating performance by each level of responsibility.
  • It secures better co-ordination among various departments.