Budget and Budgetary Control

A
SYNOPSIS
ON
BUDGET AND BUDGETARY CONTROL

AT
HERITAGE FOODS IND LTD
Submitted
By
INDRALA RAJU
H.T.NO: 1302-18-672-106
SYNOPSIS SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
Department of Business Administration
AURORA’S PG COLLEGE
RAMANTHAPUR
(Affiliated to Osmania University)
2018-2020
INTRODUCTION
Budget is essential in every walk of our life – national, domestic and Business. A
budget is prepared to have effective utilization of funds and for the realization of objective as
efficiently as possible. Budgeting is a powerful tool to the management for performing its
functions i.e., formulation plans, coordination activities and controlling operations etc.,
efficiently. For efficient and effective management planning and control are tow highly
essential functions. Budget and budgetary control provide a set of basic techniques for
planning and control.
A budget fixes a target in terms of rupees or quantities against which the actual
performance is measured. A budget is closely related to both the management function as
well as the accounting function of an organization. As the size of the organization increases,
the need for budgeting is correspondingly more because a budget is an effective tool of
planning and control. Budget is helpful in coordinating the various activities (such as
production, sales, purchase etc) of the organization with result that all the activities precede
according to the objective.
Budgets are means of communication. Ideas of the top management are given the
practical shape. As the activities of various department heads are coordinated at the much
needed for the very success of an organization. Budget is necessary to future to motivate the
staff associated, to coordinate the activities of different departments and to control the
performance of various persons operating at different levels.
Budgets may be divided into two basic classes. Capital and operating budgets.
Capital budget are directed towards proposed expenditure for new projects and often require
special financing. The operating budgets are directed towards achieving short-term
operational goals of the organization for instance, production or profit goals in a business
firm. Operating budgets may be sub-divided into various departmental of functional budgets.
This system helps in fixing the goals for the organization as a whole and concentrated efforts
are made for its achievements. No system of planning can be successful without having an
effective and efficient system of control. Budgeting is closely connected with control. The
exercise of control in the organization with the help of budgets is known as budgetary
control. The process of budgetary control includes:
1. Preparation of various budgets.

2. Continuous comparison of actual performance with budgetary performance.
3. Revision of budgets in the light of changed circumstances.
A system of budgetary control should not become rigid. There should be enough scope of
flexibility to provide for individual initiative and drive. Budgetary control is an important
device for making the organization. More efficient on all fronts. It is an important tool for
controlling costs and achieving the overall objectives.
Some advantages of budget and budgetary system are:
a) It helps in maximization of profits of the enterprise by proper planning and

coordination of different functions.
b) The working of different departments and sectors is properly coordinated to achieve
the target of the budget.
c) The deviation in budgeted and actual performance will enable the determination of
weak spots
d) The management will be able to take corrective measures whenever there is a
discrepancy in performance.
Controlling your financial affairs requires a budget. For many people, the word "budget" has
a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a
means to achieve financial success.
Whether you make thousands of naira a year or hundreds of thousands of naira a year, a
budget is the first and most important step you can take towards putting your money to work
for you instead of being controlled by it and forever falling short of your financial goals.
Budgeting and tracking your expenses gives you a strong sense of where your money goes
and can help you reach your financial goals. Since financial matters are one of the leading
causes of marital discord and divorce, getting a handle on your spending, implementing a
budget, and saving for the future can also have positive effects on your relationship with your
spouse or partner.
OBJECTIVES OF STUDY
The primary objectives of the project are as follows:
 To understand the budget and budgetary control system of HERITAGE FOODS IND
LTD.
 To study variations of components of revenue budget and components of operational

expenditure budget.
 To analyze and compare the variation of revenue budget and operational budget. To
suggest the effective budgetary mechanism for HERITAGE FOODS IND LTD.
NEED OF THE STUDY
Budgetary control is a strong tool of business is to maximize profits. The management

is therefore always trying to focus o n the proper planning, effective coordination and control
in order to maximize profits. There are various managerial tools and techniques useful for the
management to plan and control business operations. Budget is also used for the management
to plan and control business operations and it is widely used as a standard device of planning
and control.
Budget provides as a valuable aid to management through planning, coordination

and control. It is a tool which measures the managerial performance of an organization. It
promotes good morale and generates harmony in the organization. Also it promotes
efficiency and facilities management by exceptions. It helps in promoting a feeling of cost
consciousness among the employees in the organization.
On the other side, as a budget is based on estimates, it may or may not be true. It is
not substitute of management because, the efficiency and utility of the budgetary system
depends on the skill and experience of the management. It cannot be executed automatically
because continuous efforts are necessary for the execution of the budget. In case of the
manufacturing organizations, the estimation about the future is very important for the
production activities as huge amount of costs are invested in the same activity. Especially the
medium scale manufacturing organizations have their key customers & these customers are
the large scale manufacturing organizations. The medium scale engineering industries are
numerous. These types of industries manufacture their products as per the demands &
requirements of the large scale industries (key customers). The large scale & continuous
demand (& supply) is throughout the year. For this purpose, the production budget &
budgetary control on the same function becomes very essential.
SCOPE OF THE STUDY:
Since it is not possible to conduct macro level study of all software industries in Andhra
Pradesh, so this study is restricted to HERITAGE FOODS IND LTD. only.
The study is limited based on data provided by the company’s financial statements. So the
limitations of the statements are equally applicable of this study.
RESEARCH METHODOLOGY:
The proposed study is carried with the help of both primary and secondary sources of data.
PRIMARY DATA:
The primary data is collected by interacting with the finance manager and other concerned
executives at the administrative office of the company.
SECONDARY DATA:
All the secondary data used for the study has been extracted from the annual reports, manuals
and other published material of the company.
SOURCES OF DATA:
The data of HERITAGE FOODS IND LTD, have been collected mainly from secondary
sources viz.
1. Form the concerned employees of the HERITAGE FOODS IND LTD.
2. HERITAGE FOODS IND LTD. Journals.
3. Accounting books, records.
4. Key books of concerned title.
5. Statistical records
ARTICLES:
Article : 1
Title : Budget and budgetary control Ownership
Authors : Boodhoo Roshan
Source :The journal of online education, new work January-2009
Abstract : There have always be controversies among finance scholars when it comes to
the subject of the Budget and budgetary control . So far, researches have not at reached a
consensus in the optimal structure of firms by simultaneously dealing with the agency
problem.
Article : 2
Title :Dynamic Budget and budgetary control . A comparative analysis between ICT and
NON ICT firms
Authors : Dany Aoun And Junseok Hwang
Source :ICFAI journals of industrial economic may-2007
Abstract :This paper develops a model of dynamic Budget and budgetary control based
on a simple of NASDAQ listed firms and estimated the unobservable optimal Budget and
budgetary control using a wide range of observable determinants.
Article : 3
Title : Determinants of Budget and budgetary control : A case study of listed companies
of Nepal
Authors : Keshar j, baral.phd.
Sources : The journal of Nepalese business
Abstract : In this paper an attempt has been made to examine the determinants of capital
Structure size, business risk growth rate, earnings rate, dividend payout, debt service
capacity and degree of operating leverage of the companies listed to Nepal Stock
Exchange Ltd. As of July-16-2003.
BIBLIOGRAPHY
BOOKS REFERED:
 Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill Publishing Co.,

New Delhi, 2007.
 I M Pandey, Essentials of Financial Management, Vikas Publishing House Private
Ltd, New Delhi, 1995.
 Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford
university press, New Delhi, 1995.
 Anthony, R N and J S Reece, Management Accounting Principles, Taraporewala,
Bombay.
JOURNALS
 The journal of finance

 International journal of finance & policy analysis
 Journal of finance education.
NEWS PAPERS
 Financial Express(December 2018)

 Economic Times (December 2018)
WEB SITES
 www.google.com
 www.yahoo.com
 www.theindiacement.com
 Www.Bharathicement.Com

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A

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

(Affiliated to Osmania University)

1. Preparation of various budgets.

a) It helps in maximization of profits of the enterprise by proper planning and

The primary objectives of the project are as follows:

 To study variations of components of revenue budget and components of operational

Budgetary control is a strong tool of business is to maximize profits. The management

Budget provides as a valuable aid to management through planning, coordination

Title : Budget and budgetary control Ownership

Authors : Boodhoo Roshan

Source :The journal of online education, new work January-2009

Authors : Dany Aoun And Junseok Hwang

Source :ICFAI journals of industrial economic may-2007

Authors : Keshar j, baral.phd.

Sources : The journal of Nepalese business

 Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill Publishing Co.,

 The journal of finance

 Financial Express(December 2018)

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