Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614

Volume 2, No.12, December 2013

The Impact Of Budgeting And Budgetary Control On The

Performance Of Manufacturing Company In Nigeria

Siyanbola, Trimisiu Tunji, Lecturer In Accounting, Babcock University, Ilishan Remo, Ogun State, Nigeria
Abstract
This study, the impact of budgeting and budgetary control on the performance of manufacturing company in Nigeria, was
conducted using Cadbury Nigeria Plc, as case study. Since wants are plenty while resources are limited, every organisa-
tion tends to find means by which it can get what it wants with the limited resources at its disposal. Therefore, firms seek
to adopt the concept of budgeting and budgetary control to satisfy their needs at the least possible cost and at the same
time fulfill their stewardship obligations to the numerous stakeholders. We adopted a descriptive research design with data
gathered through questionnaire administered to respondents. Non-parametric tool of chi square was employed to analyse
the data. Hypotheses were tested and analysed on a 5% level of significance and it was revealed that budgeting is a useful
tool that guides firms to evaluate whether their goals and objectives are actualised. Considering the changing environ-
ment in which firms now operate, it can be concluded that budget, which is a continous management activity, should adapt
to changes in the dynamic business environment.

Keywords: Budgeting, budgetary control, manufacturing companies, stakeholders

Introduction dictionary defined budget as an estimate or plan of the

Wants are numerous while resources are limited but money available to somebody and how it will be spent
there is every tendency to waste or under-utilise the li- over a period of time. Both Horngreen and the dictio-
mited resources by the human factor involved in the pro- nary emphasised the word plan, but planning itself is
duction of goods and services. With various companies found in all aspect of human endeavour, hence planning
competing with one another, only few that are able to is a blue print of business growth and a road map for
produce at least possible cost will survive the growing development that helps in deciding objectives, qantita-
competition in the market. Therefore, it is paramount for tively and qualitatively. It involves setting a goal on the
every serious business undertaken to produe at that poss- premise of the objectives and keeping of the resources.
ible minimum cost so as to remain in business and also The process of planning requires that managers of busi-
achieve the corporate objectives of profitability and sta- ness to act as if they are fortune tellers and attempt to
bility. In view of this, there is every need to do a realis- predict the future course of action to be adopted. Such
tic planning of the activities of the firm taking into con- prediction of the so-called fortune tellers will determine
sideration the limiting factors and the long term objec- whether or not the objectives of the firm will be met.
tives of the firm. In order to achieve this, budgeting – a
tool of planning and control becomes indispensable. Adams (2001), views budget as a future plan of action
Budgeting is ubiquitous and has long been considered as for the whole organisation or a sector thereof. Budgets
a necessary tool in managing a company. are plans that deal with future allocations and utilisation
of resources to different activities over a given period of
A budget has been defined by Chartered Institute of time. For any organisation to make progress or achieve
Management Accountants (CIMA), as “a financial or its goals, it needs capital and to be able to make profit, it
qualitative statement prepared and approved prior to a requires planning of its resources, which can only be
defined period of time for the purpose of attaining a giv- achieved through budgeting, hence budgeting serves as a
en objective. It may include income, expenditure and tool for financial planning.
the employment of capital”. CIMA also defined budgeta-
ry control as “the establishment of budgets relating the Batty (1982), defined budgetary control as a system
responsibilities of executives to the requirements of a which uses budgets as a means of planning and control-
policy and the continous comparisons of actual with ling all aspects of producing and or selling commodities
budgeted results, either to secure by individual action the or services. This is true as we tend to prepare revenue
objectives of that policy or to provide a basis for its revi- and expenditure variance analysis to be able to deduce
sion. areas of divergencies for which the management needs
to watch to avoid embarassment as any adverse variance
Horngreen (1982) defined a budget as “a quantitative will translate into inability to meet the corporate objec-
expression of a plan of action and an aid to coordination tive which will eventually lead to disagreement with
and implementation”. The Oxford Advanced Learners‟ stakeholders.

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 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 2, No.12, December 2013

Pandy (1985) has observed that although many people in England when the Chancellor of the Exchequer, brit-
will complain about budget and its process, budgets are ish equivalent of our Minister of Finance, used to pre-
indispensable in a large modern organisation as the ben- pare his annual account to be read to the parliament in a
efit that occurs from budgets and its control is much scroll, usually put in a bag. During the time for discus-
greater than the cost involved. In view of this, the fact sion on the finances of the state he used to open his bag
that resources are scarce, coupled with high competition containing the statement of accounts to be read to the
that permeate most businesses, budgets when rightly parliament. The name of this bag is called the budget,
applied, would be an effective tool for planning and con- which has its original word in french (boguette). With
trol, especially in large corporation as Cadbury Nigeria time, the financial statement took over the name of the
Plc. bag, hence today‟s statement of finance for governments
on yearly basis is referred to as the budget.
Lucey (2010), in support of the CIMA‟s definition de-
fined budget to be a plan quantified in monetary terms, It is the same Great Britain that firstly adopted the prac-
prepared and approved prior to a defined period of time, tice of an annual national budget in 1787, the parliament
usually showing planned income to be generated or ex- adopted the Consolidated fund Act which provided for a
penditure to be incurred during the period and the capital single general fund for receiving and recording all reve-
to be employed to maintain the given objective. From nue and expenditure. This laid the basis for a modern
this definition, we can as well state that budget is an aid budget system, by 1822 the chancellor of Exchequer had
to making and coordinating short range plan; a device adopted the practice of presenting an annual budget
for communicating plan and objectives to various re- statement to account committee for respective review of
sponsibility centres and a basic evaluation of perfor- chequer and Audit Act provided an independent post
mance. audit. The United State adopted the system by 1912, as
the federal budget system was set up by the budget and
Therefore, it can be said that budget is a parameter accounting Act of 1912 and by 1831, the French parlia-
which measures the actual achievement of people, de- ment controlled the details of appropriation.
partments, ministries and firms, while budgetary control
ensures that actual results are positively or negatively in Currently, much attention has been given to the
accordance with the overall financial and policy objec- strenghtening of budget and planning and their interrela-
tives of the establishment. tionship in developing countries including Nigeria. The
advocacy for this has come from prominent international
1.2 Literature Review agencies as United Nation, International Monetary Fund,
Historically, the scripture made us to believe that budget World Bank and United State Agency for International
originates as far back as the stone age period, when the Development. All these agencies are all interested in
early man failed to get all his needs he was forced to encouraging developing and underdeveloped nations to
plan and manage the little he had in terms of foods and improve their budget practice. All these show the im-
other essential things. He rationed his food over a period portance attached to budget as a management process.
of time so as to prevent himself from being starved,
though his wants as compared to what the modern man 1.2.1 Concepts of Budget
will require are very small, he still could not get all he As mentioned in our introduction, budgets are statements
needed to the level of his utmost satisfaction. He pre- of estimated resources set apart for execution of planned
served the fruits he plucked during their seasons for the works or activities over a specified period of time. It is a
period of glut, when they are not in plenty, so as to avoid blue print of the outcome of the organisation‟s operation
starvation during that period. He also preserved the in a financial year. It indicates the qualitative parame-
excess bush meats, as he was not sure he would be able ters of an organisation‟s performance, while budgetary
to get animal killed on daily basis. As far as the early control, according to Terry, is a process of finding out
man plans for the future because of uncertainty that per- what is being done and involves the act of comparing the
vades the future, he is said to be involved, directly or actual result with the budget to verify accomplishment or
indirectly, in primitive budgeting. remedy the differences.

Modern day budgeting started during the Egyptian and Dimock is of the view that budget “is a financial plan
Roman civilization periods around 2500BC and 500BC summarising the financial experience of the past, stating
respectively. Then the merchants belief in drafting all the current plan and projecting it over a specified period
expected expenditure against expected income in respect of time in future”. Therefore, a budget is a keystone of
of their businesses so as to be able to know the kind of financial administration and the various operations in the
venture that would be profitable. Formal presentation field of public finance are correlated through the instru-
and preparation of budget started during the middle age ment of budget. A budget is a financial report of state-

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 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 2, No.12, December 2013

ment and proposals which are periodically placed before agers to help them in their forecasting; ensuring that
the legislature for its approval and sanction. It is the departmental managers prepare their budgets in
report of the entire financial operations of the govern- time; preparing the budget summaries; submitting
ment and gives us a glimpse of future fiscal policy. In budgets to committee and furnishing explanation on
order for us to have a gainful understanding of the con- particular points; discussing difficulties with man-
cept budget, we need to consider its purpose. agers and coordinating all budget works;
e) Establishing the budget periods: budget could be
1.2.2 Purpose of Budgeting established into control periods which could be
Below are some of the essence of budgeting for the fu- weekly, monthly, quarterly or even yearly;
ture: f) Preparation of the master budget: this is the con-
a) To improve planning and control with ultimate in- solidation of various functional budgets (sales budg-
tention of increasing the profit and financial position et, produduction budget, production cost budget,
of the firm; plant utilisation budget, capital expenditure budget,
b) To find the most profitable course of action through selling and distribution budget and cash budget).
which the efforts of the business may be directed in Master budget can be summarised into Budgeted
meeting its primary objectives; Statement of Comprehensive Income and Budgeted
c) To assist management in holding the business as Statement of Financial Position. Both the master
nearly as possible on the survival course; budget and cash budget can be described as the fi-
d) To force management to focus attention on particu- nancial budget. All these budgets, master and func-
lar operating and financial problems so that effec- tional, can be further classified
tive planning would be made for them
e) To translate the objective of an organisation into 1.2.4 Classifications and types of Budget
action; Budgets can be classified into:
f) To coordinate the various factors of production with a) Short term budget;
a view to satisfying all stakeholders; b) Long term budget;
g) To communicate the organisational objectives c) Fixed budget;
across the firm; d) Flexible budget;
e) Zero Based Budget (ZBB);
Since we have highlighted the various purposes of pre- f) Rolling budget;
paring the budget it is necessary for us to restate the var- g) Activity Based Budgeting;
ious steps involved in the preparation of budget. h) Incremental budgeting;
i) Planning, Programming Budgeting Systems (PPBS)
1.2.3 Steps In Budget Preparation
The following steps are to be established to prepare a 1.2.4.1 Short term budget
quality budget: Budget established for use over a short period of
a) Existence of a budget manual: the manual shall time, usually a year, which the responsible officer is to
contain the standing instructions governing the re- use for control purposes. This is commonly in use in
sponsibilities of persons, procedures, forms and manufacturing industries due to the complex and dy-
records relating to the preparation and use of the namic environment in which they operate.
budget;
b) Constitution of the budget committee: the com- 1.2.4.2 Long term budget
mittee consists of the chief executive officer and This is a long term plan, also called develop-
representatives of functional areas as finance, pro- ment plan. It is normally for a minimum duration of 5
duction, marketing, selling, engineering etc. The years and is sometimes called the strategic plan of the
committee is to formulate the program for the prepa- organisation. Government prepares 5 years Develop-
ration of the budget; ment plan, which can be rolled over for every five year
c) Identifying principal budget factor: the factor as manufacturing companies also prepare 5 years strate-
that limits the level of activities (such as shortage of gic plans, which is sometimes broken into yearly budget
skilled labour, inadequate raw material or machine rolled over from one year to the other.
capacity) the extent of which should be firstly as-
sessed before preparing the functional budgets; 1.2.4.3 Fixed budget
d) Appointment of a budget officer: normally an ac- CIMA defined fixed budget as budget set prior
countant who is charged with the responsibility of to a control period and not subsequently changed in re-
issuing budget instructions to various departments; sponse to changes in any activity costs or revenues. It
receiving and checking the budget estimates; pro- may serve as a benchmark in performance evaluation.
viding historical information to departmental man-

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Volume 2, No.12, December 2013

1.2.4.4 Flexible budget The department activities are driven by demands

CIMA defined flexible budget as a budget designed to and decisions which are beyond the control of
change in accordance with the level of activity attained. budget holder;
This budget recognises the existence of fixed, variable Encourages immediate and relevant performance
and semi-variable costs and is designed to change in measures required than are found in conventional
relation to the actual volume or output or level of activ- budgeting systems.
ity in a period.
1.2.4.8 Incremental budgeting
1.2.4.5 Zero Based Budgeting. This is the traditional approach that uses the current year
This is also called Priority based budgeting. It is a tech- estimates of income and expenditure as the basis for
nique which seeks to eliminate the drawbacks of tradi- determining the budget for the year. It is normally used
tional incremental budgeting by taking the budgets for in public sector and it has the misfortune of carrying
service of overhead centres back to minimal operating over the inadequacy of yester-years into subsequent year
level and then requiring increments above this level to be budgets as it only increases the current period‟s figure
quantified and adjusted. ZBB was introduced in the early with what the establishment thinks is the inflationary
1970s in the US by Phyrr, O. and gained prominence premium for next year financial period.
because of its practicability. President Carter then di-
rected all US governments to adopt the technique. The 1.2.4.9 Planning, Programming Budgeting System
technique is concerned with the evaluation of cost and (PPBS)
benefits of alternatives and implicit in it is the concept of This system analyses the output of a given programme
opportunity cost. It is applied in three stages of: and also seeks for alternatives to find the most effective
a) The decision unit: i.e subdividing the organisation means of reaching basic programme activities. It in-
to discrete sub-units where operations can be mean- volves the preparation of long term corporate plan that
ingfully and individually identified and evaluated; clearly establishes the objectives that the organisation
b) The decision packages: each decision unit manager has to achieve. It aims at achieving the following objec-
submits no less than three budget packages namely: tives:
the lowest level of expenditure; the expenditure re- a) Enabling the management of a non profit making
quired to maintain levels of activities and the ex- organisation to make more informed decision about
penditure required to provide an additional level of the allocation of resources to meet overall objectives
service or activity; of the organisation;
c) Agreed packages will form the budget. b) Enables the management to identify the activities,
functions or programmes to be provided thereby es-
1.2.4.6 Rolling Budget tablishing a basis for evaluation of their worthiness
This is also known as continous budget. It is a system of and
budgeting that involves continously updating budgets by c) Provides information that will enable management
reviewing the actual results for a specific period in the to assess the effectiveness of its plans.
budget and determining a budget for the corresponding
time period. Under this peiod, instead of preparing a PPBS was developed in North America in state and fed-
budget annually, there would be budget every three or eral government activities, based on system theory, out-
six month so that as the current period ends, the budget put and objective oriented with a substantial emphasis on
extended by an extra period. resource allocation based on economic analysis. It is not
based on traditional organisational structure and divi-
1.2.4.7 Activity Based Budgeting sion, but on programmes of activities with common ob-
This is also called activity cost management which is jective of the organisation sub divided into programmes.
defined as “a method of budgeting based on an activity These programmes are expressed in terms of objective to
framework and utilizing cost driver data in the budget be achieved over the medium to long term, say 3 to 5
setting and variance feedback processes. It is a part of years. The programme is objective related and spread
planning and controlling system which tends to support across several conventional departments.
the objectives of continous improvement and it also a
form of development of conventional budgeting system. 1.2.5 Problems Of Budgeting
It is characterised by the following: Budgeting problem can be classified into quan-
Recognition of activities that drive cost with the aim titative and non-quantitative as below:
of controlling the causes of cost directly Rather than
the cost themselves; 1.2.5.1 Quantitative Problems
Differentiates and examines activities for their value Budget is concerned with the future and as such the data
adding potentials; that goes into its preparation must be future-oriented but

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Volume 2, No.12, December 2013

on past events. Nevertheless, there is always a technical The goal of control is ensure that operations and per-
problem in forecasting accurately the future in a world formance conform to plans. Controlling includes all
that is dynamic in nature. It should also be noted that activities that ensure that the actions of the organisation
since budgets are set by human judgement, they are sub- are directed toward the stated goals.
jected to the same feasibility which attends all human
activity. Therefore, the dynamism of the future would Koontz et al (1979) defined control as the regulation of
definitely raise variance between the actual and the work activities in accordance with predetermined plans,
budgeted results. such as to ensure the accomplishment of the organisa-
tions objectives. Control operates through standard and
1.2.5.2 Non-Quantitative Problems also measures the work performance according to these
These are the behavioural problems of budget. They standards and correct deviations from the standard. It
arise as a result of the behaviour of human factor that is presumes that there is a standard or plan against which
unpredictable. An average human being changes like performance is compared. Lucey (2003), in support of
weather with situation to his best advantage. It is this the above, opined that control concerns itself with the
same human being that is expected to supply the infor- efficient use of resources to achieve a previously deter-
mation on which the formulation of budget would be mined objective, or set of objectives contained within a
based. He is also expected to use the budget to achieve plan.
the organisational objective. He may decide to be enthu-
siastic or indifferent about it. He may even consider it Steps involved in control include:
that his employer wants to reap where he has not shown a) Establishing plan, goal or objective decision rule;
at his expense, he may therefore bring in wide variables b) Recording of actual performance of activity;
into the budget, most especially where he is informed c) Creation of a mechanism to compare the above two
that the budget would serve as a reference point in de- steps;
termining his efficiency of performance. Also, execu- d) Extraction of variances, that is, the difference be-
tives and employees are expected through education to tween the first two steps;
have a very good understanding of what the budget is all e) Investigation of the causes leading to the variances;
about where this education and consequently the under- f) Correcting the variance or taking appropriate action
standing is lacking, failure and collapse of the budgetary on the variances.
process is unavoidable. With this as background information we can now con-
veniently look at budgetary control in greater perspec-
Frank Wood (1988) has noted that many people look at tive.
budgets not as a control tool but as a straight jacket. Too
much rigidity in the pursuance of the budget could al- 1.2.6.1 Budgetary Control
ways be detrimental to the realisation of the objectives of Lockyer, K (1983) was of the opinion that ones a budget
the budget. Horngen and Foster (1985) observed that the has been drawn up, it can be used as an instrument of
budget helps managers but that budget itself needs help. control by continually comparing actual with budget
To this end, top management and indeed the work force performance. Since all activities are ultimately capable
must be in support of the budget. Where this support is of being expressed in financial terms, the breath of con-
however lacking, there is bound to be problem in the trol possible is very great. Hence budget control is part
actualisation of the objectives of the budget. This is in of the overall system of responsibility accounting within
line with Frank Wood (1958) who noted that the more an organisation, as costs and revenues are analysed in
managers are brought into the budgetary process, the accordance with areas of personal responsibilities of the
more successful the budgetary control is likely to be. A budget holders through permitting financial monitoring.
manager whom a budget is imposed rather than actively
participating in it formulation is more likely to pay less Budgetary control relates expenditures to the personnel
attention to the budget and use it unwisely in the control responsible for the various expenditures at the various
process. Miller and Earnest (1966) summarised the need cost centres so that each manager is held responsible for
to secure the actualisation of the budget through partici- the cost by which he has control.
pation by saying that „participation tends to increase the
commitment, commitment tends to heighten motivation, The terminology of CIMA (2006) defined budgetary
motivation which is job oriented tends to make managers control as the establishment of executive the requirement
work hard and more productive work by managers tends of policy and the continous comparison of actual with
to enhance the company‟s prosperity, therefore participa- budgeted results, either to secure by individual action,
tion is good‟ the objectives of that policy or to provide a basis for its
revision. Suffices to say that budget is not an island on
1.2.6 Concept of Control

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Volume 2, No.12, December 2013

its own, emphasis is placed on control which is done in tion;

form of comparing action with budgeted plan. e) Provision of yardstick against which actual result
can be compared along with predetermined result;
Lucey (2008) defined budgetary control as the process of f) Channelization of capital expenditure in most prof-
comparing the actual results with the planned results and itable manner.
reporting on the variations called variance. This accord-
ing to him, sets control framework which helps expendi- Conditions for Effective Budgetary
1.2.6.3
ture to be kept within an agreement limits, deviations are Control System
noted all along for corrective actions. In some circum- The under-listed conditions are necessary to be in place
stances, it may be necessary to revise goal but this for a budgetary control to be effective:
should not be a normal occurence but only in exceptional a) Involvement and support of top management;
circumstances. b) Clear cut information of long term corporate objec-
tives within which the budgeting system will oper-
Practically, budgetary control involves departmental or ate;
sectional or functional heads in the organisation, receiv- c) Realistic organisation structure with clearly defined
ing a copy of budget relating to his activities. Each responsibility;
month he will receive a copy of budget report showing d) Genuine and full involvement of the line managers
visibly where he has over or under spent his budgeted in all aspect of the budgeting process;
allowance. From this he will be able to decide on the e) Appropriate accounting and information system
corrective step to take. This is in tandum with the fact which will include: the record of expenditure and
that variances are the responsibility of departmental or performance related to responsibility; prompt and
sectional heads and everyone of them has to explain the accurate reporting system showing actual against
variance and act in time to stop future occurence of ad- budget; ability to provide more detailed information
verse variances. Professor Pogue underscores this prac- or advice on request;
tical aspect of budgetary control, when he states that if f) Regular revision of budget and targets, where neces-
the actual sales as compared the budget always results in sary;
adverse variance, provided it is realistic and attainable, it g) To be administered in a flexible manner. Changing
is not advisable to revise the figure just because they in conditions may call for changes in plans. Rigid
were not attained. Therefore, it can be concluded that adherence to budgets which are clearly inappropri-
budgetary control on its own controls nothing but rather ate for current conditions, will cause the whole
it is management acting on the information received by budgeting system to lose credibility and effective-
way of results that exercise control, in short, manage- ness.
ment holds the control yardstick.
Batty (1963) budgetary control is a system which takes
budget as a means of producing and or selling commodi- 1.3 Statement of Problem
ties or services. The same Batty (1970) went further to The decision as to how to distribute limited financial and
state that budgetary control aims at the performance of non-financial resources, in an effective and efficient
three primary functions of planning, corporation and manner, is an important challenge in all organisations.
control aided by feedback and corrective action. But In most large and complex organisations, this task would
Buyer and Holmes (1984) considered budgetary control be nearly impossible without budgeting. Without effec-
as a means of control in which the actual state of affairs tive budget analysis and feedback about budgetary prob-
is empowered with that planned for, so that the appropri- lems, many organisations would become bankrupt.
ate action may be taken with regards to any deviations Some of the problems arise from inadequate data to for-
before it is too late. mulate and implement a proper budget; and non exis-
tence of well defined structure, which leads to overlap-
ping of duties. These deficiences can therefore be ad-
1.2.6.2 Objectives of Budgetary control dressed through the use of budgeting technique. There-
The major objectives of budgetary control can be sum- fore, this study traces the extent by which budgeting can
marised as: used as a good planning and controlling tool in a manu-
a) Combination of ideas of all levels of management in facturing company.
the preparation of budget;
b) Coordination of various activities in business or-
ganisation; 1.4 Research Questions
c) Revelation of where an organisation needs to rem- The study was guided by the following research ques-
edy a situation; tions:
d) Planning and controlling of all income and expendi- a) What importance does budgeting technique serve in
ture to achieve maximum benefits for the organisa- a manufacturing company in Nigeria?
b) How does budgeting aid the planning of a manufac-

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turing compnay profit in Nigeria? 1.7 Population, Sample and Sampling

c) How does budgetary control affect the working per- Technique
formance of employees in a manufacturing company The study focuses on budgeting and budgetary control of
in Nigeria? manufacturing company, with special reference to Cad-
d) Why do manufacturing companies in Nigeria lack bury Nigeria Plc. In order to carry out an in-depth and
adequate skill for planning and controlling policy comprehensive study, 26 respondents were randomly
formulations and implementations? selected. These respondents cut across all the cadres of
e) In what way do inadequate data and records create the company and its customers.
problems for manufacturing companies in formulat-
ing effective budgeting?
1.8 Instrument
The primary data was employed in gathering information
1.5 Research Hypothesis from staff of all cadres. Interviews were also conducted
For the purpose of analysing the data, the following hy- with other stakeholders, including customers of compa-
potheses were tested: ny. The questionnaire consists of two sections. Section
a) Ho1: There is no significant relationship between A elicits demographic information like gender, working
budgetary planning and control on organisation per- experience, while Section B contained structured items
formance; relating to the research questions that necessitated this
b) Ho2: Effective budgetary control does not influence research.
the result achieved;
c) Ho3: Budgeting technique is of no importance in a
manufacturing firm;
d) Ho4: Budgetary control does not affect the working 1.9 Validity and Reliability of the In-
performance of an employee in a manufacturing strument
concern. To ensure the validity of this research, the instrument
was subjected to criticism by specialist in the areas of
1.6 Methodology educational management aside from peer review con-
The methods adopted by this researcher in collecting the ducted by the researcher. The reliability of the instru-
data are direct interviews, observations and the use of ment was obtained through a test-retest technique to
questionnaire. Inquiries were also made both directly analyse the data collected.
and indirectly through some unusual questions to both
the staff and management of the company.

2.0 Results
Table 1: There is no significant relationship between budgetary planning and control on organisation performance;
Subject No % T-calculated Table value Decision
Agreed 23 88.5
Disagreed 03 11.5 33.62 9.49 Reject

Level of significance – 0.5

Since t-calculated is greater than the table value (i.e. that there is significant relationship between budgetary
33.62 > 9.49), then the null hypothesis is rejected, while planning and control on organisational performance
the alternative hypothesis is accepted and we conclude

Table 2: Effective budgetary control does not influence the result achieved
Subject No % T-calculated Table value Decision
Agreed 22 84.6
Disagreed 04 15.4 27.10 9.49 Reject

Level of significance – 0.5 effective budget control influences the result normally
Since t-calculated is greater than the table value (i.e. achieved.
27.10 > 9.49), then the null hypothesis is rejected, while
the alternative hypothesis is accepted and conclude that

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Table3: Budgeting technique is of no importance in a manufacturing firm

Subject No % T-calculated Table value Decision
Agreed 17 65.4
Disagreed 09 34.6 22.00 9.49 Reject

Level of significance – 0.5 the alternative hypothesis is accepted and we conclude

Since t-calculated is greater than the table value (i.e. that budgeting technic is of great importance in manu-
22.00 > 9.49), then the null hypothesis is rejected, while facturing companies.

Table4: Budgetary control does not affect the working performance of an employee in a manufacturing concern.
Subject No % T-calculated Table value Decision
Agreed 15 21.4
Disagreed 11 78.6 15.67 9.49 Reject

2.2 Conclusions
Level of significance – 0.5 The relevant research questions raised above has been
Since t-calculated is greater than the table value (i.e. examined in the light of mode of operation of manufac-
15.67 > 9.489), then the null hypothesis is rejected, turing companies. In the operation of manufacturing
while the alternative hypothesis is accepted and we con- companies, it has been discovered that quite a number of
clude that budgetary control affects the working per- the employees know the budgetary system of the com-
formance of employee in manufacturing company. pany and there exist considerable participation of lower
level employees in planning and budgeting. It was also
2.1 Discussion discovered that the work force is well motivated and
Finding of hypotheses tested and direct interview con- competent enough to propel the company to a greater
ducted reveals the followings: height.
a) The ever changing Nigeria business environment
has made it necessary the need for organisations to Finally, it can be said that dedicated work force, im-
develop and implement budgets, to ensure this, the proved technology and effective policies (budgeting in-
financial year and major objectives of the organisa- clusive) has helped the manufacturing companies to re-
tion must be considered; main effective and efficient in fulfilling their steward-
b) Cadbury the case study, being a multinational com- ship obligations to the stakeholders.
pany, has well defined approach to budget planning,
implementation and control. All departments are in- 2.3 Recommendations
volved in the entire budget process, as departmental From the above findings and in order for the manufactur-
heads prepare budget with full participation of their ing companies to operate profitably, they must take the
employees; following critical steps:
c) Budgets are prepared on yearly basis, but with vari- a) Adopt a budgetary system of adequate planning
ous control periods for review within the year, the with strict adherence to implementation, that cuts
implementation of approved budgets take effect at accross the finance, production, administration,
the beginning of the budget period; marketing etc;
d) Budgets are normally communicated to all staff on b) The finance department should review all existing
regular bases for proper and quick accomplishment standards and introduce measures that will tighten
of goals; the internal control system to prevent leakages of fi-
e) As a structured organisation, there exists a forma- nancial resources;
lised organisational structure in Cadbury, through c) Only judicious and profitable investments should be
which responsibilities are assigned for control pur- undertaken;
poses, these control influence the working perfor- d) Top executives of Cadbury Plc, who presently have
mance of the employees; firm grip on the beverages and confectionary market
f) The feedback of result of each department on the in the country, should assess the current marketing
implementation of the goal is compared with the and distribution policies as well as economic, politi-
budgeted result and any variances are highlighted cal, technological and other socio-economic factors
and this is used to evaluate the company‟s perfor- that affect the company;
mance and effect changes where necessary; e) Budgeting and budgetary control system should not
be too complex for the people to understand;
f) To enhance the attainability of budgets, resources

www.borjournals.com Blue Ocean Research Journals 15

 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 2, No.12, December 2013

should be provided to complement the budgets;

g) As the environment is dynamic, budget should be
reviewed and adjustment made from time to time,
where necessary;
h) The management should ensure that workers pursue
the set budget;
i) There should be an excellent communication link
between production and sales departments, so as to
meet target thereby eliminating undue variances.

References
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[2.] Batty, J. (1979), “Accounting for Managers”,

Heinemann Publishers, 2nd Edition.

[3.] Buyers and Holmes, G. (1984), “Principle of Cost

Accounting”, Cassell Ltd. 4th edition.
[4.] Chartered Institute of Management Accountants
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[5.] Frank Wood (1988), “Business Accounting” Pitman

Pubishing, 8th edition.

[6.] Hongren, C.T. and Foster, G. (1985), “Cost Ac-

counting: a managerial emphasis”, New Jersey,
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[7.] Koontz, Donnel, H and Cyril (1979), “Principle of

Management: An analysis of managerial functions”,
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[8.] Lockyer, K. (1983), “Fundamental of Budget prepo-

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[9.] Lucey, T. (2003), “Management Accounting”, New

York, DP Publication

[10.] Lucey, T. (2008), “Costing”, New York, DP

Publications

[11.] Miller and Earnest, C. (1966), “Objectives and

Standards: An approach to planning and control”,
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sociation Inc

[12.] Pandy, I.M., (1985), “Element of Management

Accounting”, Vikas Publishing House Limited

www.borjournals.com Blue Ocean Research Journals 16