ABSTRACT

Budget and Budgetary control, both at management and operational level looks at the future and lays
down what has to be achieved. Control checks whether or not the plans are realized, and puts into effect
corrective measures where deviation or shortfall is occurring. This study examines how budget and
budgetary control can impact on the performance of The Diary sectors of. This reviewed the performance
of the Diary Development Department in previous and present times. t is found out that the performance
of this industry depends on the Diary products an empirical investigation was undertaken, using the
simple correlation analytics techni!ue. n most of the cases considered, established the presence of
strong relationship between turnover as a variable of budget and performance indicators "ollowing the
findings, it is advised to managers and business operators #not only in the Diary Development Department
to pay more attention to their budgetary control systems, for those without an existing budgetary control
system, they should put one in place, and those with a dummy or passive budgetary control system, it is
time they re$established a result$oriented budgetary control system as it goes a long way in repositioning
the manufacturing industry from its creeping performance level to an improved high capacity utilization
point
CONTENT
CHAPTER-1
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CHAPTER-2
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CHAPTER-3
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CHAPTER-4
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CHAPTER-5
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BIBLIOGROPHY
INTRODUCTION AND OBJECTIVES
INTRODUCTION
Budget is essential in every walk of our life < national, domestic and Business. 3 budget is
prepared to have effective utilization of funds and for the realization of ob=ective 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. "or efficient and effective
management planning and control are tow highly essential functions. Budget and budgetary control
provide a set of basic techni!ues for planning and control.
3 budget fixes a target in terms of rupees or !uantities against which the actual performance is
measured. 3 budget is closely related to both the management function as well as the accounting
function of an organization. 3s 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 ob=ective.
Budgets are means of communication. deas of the top management are given the practical
shape. 3s 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 pro=ects and often re!uire special financing. The
operating budgets are directed towards achieving short$term operational goals of the organization for
instance, production or profit goals in a business firm. (perating budgets may be sub$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. &o 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?
%. 2reparation of various budgets.
*. Continuous comparison of actual performance with budgetary performance.
/. 'evision of budgets in the light of changed circumstances.
3 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. 1ore efficient on all fronts. t is an important tool for controlling costs and
achieving the overall ob=ectives.
.ome advantages of budget and budgetary system are?
a> t 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 re!uires a budget. "or many people, the word @budget@ has a
negative connotation. nstead of thinking of a budget as financial handcuffs, think of it as a means to
achieve financial success.
;hether 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 nstead 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. .ince financial matters are one of the leading causes of marital
discord and divorce, getting a handle on your spending, implementing a budget, and .aving for the
future can also have positive effects on your relationship with your spouse or partner.
OBJECTIVE OF THE STUDY
To analyze the budget and its control in various departments of the organizations.
To determine the current budget position of the company.
To determine the optimum utilization of capital.
To know the difference between the budget and actual.
To know the expenditure incurred for different departments
NEED AND IMPORTANCE OF BUDGET AND BUDGETARY CONTROL
Budgetary control is a strong tool of business is to maximize profits. The management is
therefore always trying to focus on the proper planning, effective coordination and control in order to
maximize profits. There are various managerial tools and techni!ues use full for t he ma n a garment 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. t
is a tool which measures the managerial performance of an organization. t promotes good morale and
generates harmony in the organization. 3lso it promotes efficiency and facilities management by
exceptions. t helps in promoting a feeling of cost consciousness among the employees in the
organization.
(n the other side, as a budget is based on estimatesA it may or may not be true. t is not substitute
of management because, the efficiency and utility of the budgetary system depends on the skill and
experience of the management. t cannot be executed automatically because continuous efforts are
necessary for the execution of the budget. n 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. ,specially the medium scale manufacturing organizations have their key customers 0
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 0
re!uirements of the large scale industries #key customers>. The large scale 0 continuous Demand #0
supply> is throughout the year. "or this purpose, the production budget 0 budgetary control on the same
function becomes very essential.
LIMITATIONS
,stimates are used as basis for budget plan and estimates are based mostly on available facts and
best managerial =udgment
Budgetary control cannot reduce the managerial function to a formula. t is only a managerial.
Tool which increase effectiveness of managerial control.
The use of budget may be to restricted use of resources. Budgets an often taken as limits.
,fforts may therefore not be made to exceed the performance beyond the budgeted targets.
"re!uent changes may be called for in budgets due to first changing industrial climate.
n order that a system may be successful, ade!uate budgets education should be imparted at least
through the formative period. .ufficient training programs should be arranged to make
employees give positive response to budgetary activities.
The study is the limited up to the date and information provided by Diary Development and its
annual reports.
SCOPE OF THE STUDY
.ince it is not possible to conduct macro level study of all Diary Development departments in
.alem, so this study is restricted to Dairy products only.
The study is limited based on data provided by the companyBs financial statements. .o the
5imitations of the statements are e!ually applicable of this study.
The study is limited for a period of 6 years i.e., from *CCD$*C%%.
RESEARCH METHODOLOGY
The proposed study is carried with the help of both primary and secondary sources of data.
PRIMARY DATA
The primary data is collected by interacting with the finance manager and other concerned executives at
the administrative office of the company.
SECONDARY DATA
3ll the secondary data used for the study has been extracted from the annual reports, manuals and other
published material of the company.
SOURCES OF DATA
The data of avian dairy products have been collected mainly from secondary sources viz.
%. "orm the concerned employees of the products
*. 3ccounting books, records.
/. Eey books of concerned title.
4. .tatistical records
INDUSTRY PROFILE
The Diary Development Department was established in %F6G in Tamil &adu. The administrative and
statutory control over all the milk cooperatives in the .tate was transferred to the Diary Development
Department on first of 3ugust %F96. The Commissioner for 1ilk 2roduction and Diary Development was made
as the functional 'egistrar under the Tamil &adu Cooperative .ocieties 3ct.
;ith the H3nand patternH in the .tate of Tamil &adu, Tamil &adu Co$operative 1ilk 2roducersH
"ederation 5imited was registered in the .tate on %
st
"ebruary %FG%.
The commercial activities of the Department such as 1ilk 2rocurement, 2rocessing, Chilling, packing and
sale of milk to the consumers etc., to deal with by the Tamil &adu Diary Development Cooperation 5td., were
transferred to the newly registered Tamil &adu Co $ operative 1ilk 2roducers "ederation 5imited, popularly
known as @3avin@.
The Commissioner for 1ilk 2roduction and Dairy Development is the 7ead of the Diary Development
Department. 7e is the functional registrar in respect of Dairy Co $ operatives in the .tate. 7e is also the ,x $
officio 1anaging Director of the Tamil &adu Cooperative 1ilk 2roducers "ederation 5imited.
The Commissioner for 1ilk 2roduction and Diary Development exercises all the statutory powers with
regard to the registration of societies, supervision, inspection, in!uiry, disputes, li!uidation of milk
cooperatives including the District Cooperative 1ilkHs 2roducerHs )nions and federation under the relevant
provisions of the Tamil &adu Cooperative .ocieties 3ct, %FG/ and Tamil &adu Cooperative .ocieties 'ules, %FGG.
;hile discharging the statutory functions, the Commissioner for 1ilk 2roduction and Diary
Development is assisted by the Deputy 1ilk Commissioner #Co $ operation> in the rank of +oint 'egistrar
of Cooperative .ocieties and a Deputy 'egistrar at the 7ead!uarters besides */ Deputy 'egistrars #Dairying>
at the District level by the way of conferring the powers of the functional 'egistrar.
The .alem district co $ op. milk producersH union ltd was registered on %C$CD$%FDG. t is started
functioning from %C$CD$%FDG. The commercial production of products viz. Butter, :hee and .kim 1ilk powder
started on %9$CG$%FG/. t is a "eeder Balancing Diary.
n the beginning .DC12) procured //%CC 52D of milk from primary societies. The union gradually
expanded its activities and has now reached a daily average procurement of 4, /9,D%* 52D.
The dairy complex is situated in about in 49 acres of land bound by .ithanur and Dhalavaipatty
villages. n the initial stages the installed capacity of the Diary was one lakh liters of milk per day which was
subse!uently enhanced to / lakh liters per day.
The !uantity of milk available after local sales and dispatch to Chennai is converted into products viz.,
Butter, :hee and .kim 1ilk powder. :hee and .kim 1ilk power are being sold in the markets all over ndia
Through the Tamil &adu Co $ op, 1ilk 2roducers "ederation ltd., Chennai with @3:13'E@.
COMPANY PROFILE
The prestigious .alem Dairy complex is situated in about in 49 acres of land bound by .ithanur and
Dhalavaipatty villages. t is located =ust 9 km away from .alem railway +unction on the way to :ovt. 1edical
College and .alem .teel 2lant.
The .alem District Co op. 1ilk 2roducersH )nion 5td., has been registered on %C$CD$%FDG and started
functioning from CD$%C$%FDG. To begin with, the union started procuring //,%CC 52D of milk from **D
affiliated primary milk coop societies. Then gradually expanded its activities and now reached a daily average
procurement of more than 4.C lakhs liters per day from %C4F functional DC..
t is a "eeder Balancing Dairy i.e. converting surplus milk solids into products like butter, ghee and
.kim milk powder. The commercial production of products viz. Butter, :hee and .kim 1ilk powder started on
%9$CG$%FG/. 3ll the )nion activities are fully computerized.
This union is specially featured with
Training Centre
2rogeny Testing .cheme
Clean 1ilk 2roduction at farmer level
3septic packaging .tation
1ilk 2owder plant
.( FCC%?*CCC Certification
,xport
QUALITY POLICY
.alem 3avin is committed @to supply milk and milk products to meet needs and satisfaction of customers
by adopting best standards in a hygienic and safe environment with continual mprovement of Iuality with
1otivation, commitment and training of employees@.
ANIMAL BREEDING
n .alem milk union, 6F% 3 centers are functioning in cluster manner covering all the DC. for 3
activities.
"rozen semen is purchased from &ucleus +ersey .tud "arm, TC12" 5td., (oty and B".., TC12" 5td., ,rode
for cattle and buffalo respectively at the rate of 's.%CJ$ per dose. 3 facility has been extended at the
doorstep of the farmers and thereby the conception rate is improved. ;e have implemented the 3rtificial
nsemination 1onitoring .ystem since *CC% and we have computerized the 3 activities. Based on the report
generation, the 3 performance is monitored to improve the breeding efficiency.
ANIMAL HEALTH
3s a part of 3nimal health management, %9 nos. of regular -eterinary units and #fortnight route> and
,mergency units #round the clock> are functioning to cater to the needs of the health coverage to all the milch
animals of DC. members. nfertility camps at the society level and the breeding problems in the animals are
treated. 3s a preventive measure, the animals are vaccinated against "1D to protect the animals and milk loss.
EVALUATION
n our )nion we are implementing the pro=ect from *CC* consisting %D6C beneficiaries by
organizing *6 ;DC. with DC members each at .alem and &amakkal Districts and collecting 96CC liters per day
milk to union. n this direction a study made to observe the variations of income is increased from 's.4C per
day to 's.9C per day through dairying.
CLEAN MILK PRODUCTION
To improve the !uality of milk at farmer level, a special scheme has been introduced during the year
*CC4. 7ere the farmers are educated to produce and handle the milk with most hygienic !uality by providing
them necessary training and infra structure. 3nd the Bulk 1ilk Coolers are installed at village level to chill
the milk immediately after collection to reduce the bacterial load to the maximum level possible.
MARKETING
The 1arketing network is managed with F 1ilk 1arketing offices, 4F% agents for milk and %% for
products and through the "ederation Throughout the country and abroad.
ORGANIZATIONAL CHART
FUNCTIONS OF DISTRICT CO-OPERATIVE MILK PRODUCERS UNION
K ,stablishment of chilling centers
K "ormation of new milk routes to collect the milk produced by the member societies
K Collection of milk from societies, process and pack in modern diary plant by maintaining !uality standards
K "ixation of procurement and selling price of milk
K ncrease of milk sales by introducing innovative sales promotion activities
K .upply of inputs to the member societies obtained from unions
K .alem unions acting as a feeder balancing diary.
SPECIAL FEATURES OF THE COMPANY
;eekly four rail milk tankers of about %9CCC liters milk is supplied to mother dairy, Delhi from the
.alem Diary. 3verage %/CCC 5iters of pure milk is supplied for Chennai metro sales from .alem diary.
1ilk products like butter, ghee, skimmed milk powder, beda, dates Ehova flavored milk, Butter milk,
badam milk powder, ice cream are produced at .alem diary and selling to customers according to their re!uirements.
The company has .( FCC%$*CCC certified and . certified for the skimmed milk powder production and the .alem
diary ghee is sold with 3:13'E certificate.
&ational wide database laboratory established at .alem diary out of %6 milk producers union selected by
national diary development board in ndia. )nion is selling ghee to T7')23T7 T7')1353
D,-3.T73&31 in tankers for laddu preparation.
The union spends %64.4* lakhs, %9D.* lakhs, %GD.D4 lakhs, and *%F.*G lakhs for marketing for the past five
8ears, which includes transport and agentsH commission. The union spends / lakhs for advertisement.
OBJECTIVES
K To purchase pool process, manufacturing, distribute and sell, milk and milk by products to the members
of the affiliated societies and other private organization without affecting the interests of the affiliated
societies and their members.
K To provide veterinary artificial insemination services, medicines and undertake cattle insurance
K To buy animals on behalf of the affiliated societies and their members
K To purchase of cattle feed at whole sale rate distribution to members
K To establish dairy forms and plants with e!uipments for pasteurization
FUNCTIONS
K To purchase milk in both in the everyday morning and evening
K 2roperly paying amount for milk producers at before %C days
K .ervice provide on transport activities should making
K 'egulating for finance, marketing, packaging, and plant activities
K To watching sub small booths and plants activities
PREAMBLE
The .alem district co $ operative milk producerHs union ltd., was registered on %C$CD$%FDG under Tamil &adu
co$operative societyHs act and stared functioning form CD$%C$%FDG. The ob=ect of the union is to carry out activities
conductive to the economic development of agriculturists and agricultural tenants and laborers by organizing
effectively production, processing and marketing of milk commodities. The commercial production of products
viz. butter, ghee and skim milk powder started on %9$CG$%FG/.
LOCATION
The dairy complex is situated in about 49 acres of land bounded by .ithanur and Dhalavaipatty villages in
steel plant road.
PROCUREMENT
n total %%CC milk producerHs co$operative societies are affiliated and F/* societies are functioning. The
milk is collected through 66 milk routes daily ranging from *.6 lacks liters of milk per day depending on
the season.
The procurement and input operation are managed through G milk procurement team offices at .ale,
.ankakiri, &ammakkal, 2aramathivelur, 3ttur, 'asipuram, 1ettur, and -alapady. The milk is delivered at the
dock of the three chilling centers at &ammakkal, 2aramathivelur, 3ttur and the main dairy at .alem for chilling.
INPUT
3rtificial insemination service input veterinary service and emergency veterinary service and being
provided to the animals of the producers in societies by the veterinarians of this union. "urther, artificial
inseminations with exotic, cross bred and murrah bull semen are being undertaken through the 694 artificial
insemination sub$centers of the primary societies J union and doing on an average of *9,CCC artificial
insemination per month. &utritious cattle feed is being supplied to the members at par rate.
FODDER
The union has taken up cultivation of fodder crops like cumbunapier, hamil grass, buffalo grass,
subabul, sithakathicholam, cumbu, maize, cowpea and hedge 5ucerne etc. for distribution of seed materials to
the milk producers through milk cooperative societies at free of costJat nominal cost.
TRANNING CENTRE
The union had setup a training center in the 8ear %FG6 under operation flood. The training centres are
imparting training to the DC. personal of our union and also formperiyar, Coimbatore and nilgiris unions.
THE TRAINING CENTRE CONDUCTS THE PROGRAMMERS SUCH AS
t is proposed to organized and assist *6 women dairy co$operatives both in .alem and &amakkal
districts during the period from *CC* to *CC6, involving %D6C women members through self$help groups.
The proposed *6 dairy co$operative will have DC members in each society and they will be identified, trained in
all aspects of dairying and monitored continuously for their economic enlistment.
DAIRY
The dairy has installed capacity to process / lakhs liters of milk per day, to produce %C 1T of skim milk
powder F 1T of butter and 9 1T of ghee. The !uantity of milk available after local sales and dispatch to Chennai
is converted into products viz., butter, ghee and skim milk powder. :hee and skim milk powder are being said
in the markets all over ndia through the Tamil &adu co$op.
1ilk producerBs federation 5td., Chennai with @3:13'E@ and @.@ grades respectively. (ur products
bear the famous brand name of @3avin@....(.FCC* Certificate also obtained for production and supply of milk,
skim milk powder, butter, ghee and )7T milk in tetra pack.
QUALITY CONTROL
The role of the lab is to assist in stage$wise testing and reporting the !uality status of milk processed and
standardized so that milk of the correct standards are prepared and marketed. .imilarly cream, butter, butter$
milk, ghee and skim milk powder are tested at regular intervals both during production and storage to check that
there is no !uality deterio.
23 PRODUCTS PROFILE
AAVIN CURD
3avin curd is superior in !uality and hygienically manufactured in ambattur product dairy, packed in
heat sealed cups. t is available in all the leading super markets and aavin parlours and franchise retail outlets.
Content is *CCml.
BUTTER
2lain Butter 6CC:ms is being manufactured in feeder balancing dairies and marketed all over the .t at e .
CHEESE
The packages consist of %C cubes of *6gms each.
FLAVOURED MILK
3avin flavoured milk is manufactured in bottles and tetra pack. t is in 6 flavours #*CC ml>
%. .trawberry
* .2 ista
/. Cardomum
4. Chocolate
6. 2ineapple
K Tetra pak 0 bottles *CC ml
K .trawberry
K Cardomum
K Chocolate
K 2ineapple
K 2 i st a
GHEE VARIETIES
:hee in 6CC 1l and %CCC ml packingHs
3avin :hee is manufactured and packed in tins, and pet bottles in 1adurai, Erishnagiri, ,rode and
.alem dairies. :hee in carton is manufactured only in ,rode Dairy.
ICE-CREAMS
3avin ice cream is very well accepted by all segment people due to its high !uality. The calorific value of
3avin ice cream is %%9Ecal per %CC ml and it contains 6g "at, /.%g 2rotein, 6.4 gm Carbohydrate, C.9 g minerals and
G g added sugar. Due to high content of .ugar, diabetic and calorie conscious people are deprived of taking ice
cream and hence it is highly essential to develop alternate product to cater the need of all people. 7ence 3avin has
proposed to introduce .ugar$free ice cream.
CHARACTERISTICS
t is safe for children and pregnant women. t is non toxic, non $ carcinogenic. The ma=ority of ingested
sucralose is excreted unchanged. t is approved by )nited .tates "ood and Drug 3dministration and also
approved by 2revention of "ood 3dulteration 3ct $ %F66 #allowed maximum D6Cppm level for 1ilk 2roduct
based sweets> t is highly stable even at */C
o
C.
ENERGY VALUE
The Calorific value of the sugar free ice $ cream is only GC.C Ecal per %CC ml. t contains all the
ingredients as in ice cream but only %9 mg of sucralose is available instead of GCCC mg sugar to get the same sweet
taste. .ince it is less calorie conscious people
MANGO DRINK - MAAVIN
3avin mango drink #*CC ml> is popular among of its kind. t is packed in tetrapak package. t has a shelf life
of %GC days. t is manufactured in .alem dairy.
MASALA BUTTER MILK - LUSSI
3avin is now manufacturing and marketing spcy butter milk throughout the city. t is being sold at
's.*.CC economic type 0 /.6C premium type per *CC ml pockets through all parlors, "'(s and r e t a i l e r s.
MILK S!EETS
3avin has now entered in milk sweet division and periodically launch newer varieties. The recent one is
1ysurpa in 6CC :ms and % Eg packings. These sweets are manufactured in very high !uality standards.
3avin also manufacture Ealakanth 0 :ulab=amoon etc.

PASTEURIZED TONED MILK"STANDARDIZED MILK
.elling price of the different types of milk
The .tate government on 1onday announced an increase of '..* a liter in the price of toned milk
supplied to consumers through monthly milk cards. t would go up to 's.%D.D6 from 's.%6.D6 a liter. "or milk
sold to non$card holders through H3avinH #Tamil &adu 1ilk 2roducersH "ederation> depots or retailers, the increase
in price of toned milk is 's.*.6 a liter. The revised maximum retail price will be 's.*C.6C against the existing 1'2
of 's.%G.
STANDARDISED MILK
n the case of standardized milk sold through automatic vending machines, the rise would be 's.* for half
a liter for non$card holders. The new price would be 's.%D #current rate? 's.%6>. n case of cardholders, the
difference would be 's.%.6C for half a liter with the existing rate of 's.%4.*6 going up to 's.%6.D6.
"3 T /.CL .& " G.6L
"3 T 4.6L .& " G.6L
"3 T 9L .& " F.CL
"3 T %.6L .& " F.CL

UHT MILK
)7T milk is exclusively manufactured by .alem Dairy. t comes in % lit and 6CC ml package.
Both .tandardized #fat 4.6L and .&" G.6L> and toned milk #fat /L .&" G.6L> are available in this package. t
is called Tetra Brik. The shelf life of this product is %*C days.
%CCC ml #Tetra Brik 3septic 2ackage>
6CC ml #Tetra "ino 3septic 2ackage>
3avin .kimmed 1ilk 2owder
3avin manufacture and market . !uality .kimmed 1ilk 2owder in 6CC gms carton and % kg poly $
pack. t is manufactured in all our product dairies viz ,rode, .alem, Erishnagiri and 1adurai and
marketed throughout the .tate.
Carton $ 6CCgms
2oly Bag $ % kg
Bulk Bag $ *6 k
CONSUMABLES BUDGET FOR STORES FOR 2##$-1#
SLNO NAME OF THE MATERIALS QUANTITY RATE VALUE RS
K%
% 3cid slurry 9DCC G*.CC 64F4CC
* Caustic .oda %%CC *4.CC *94CC
/ )rea %DCC 6.%C G9DC
4 1. Barrel DCC 6CC.CC /6CCCC
T&'() $344*#
CONSUMABLES BUDGET FOR STORES FOR 2##$-1#
PACKING MATERIALS BUDGET FOR APS FOR 2##$-1#
NAME OF THE MATERIALS QTY RATE VALUE RS

23CE&: 13T,'35. "('
*CC ml "1 5aminated 2aper *D/D6CC *./6 94//%*6
*CC ml 1ango laminated paper 4CCCCC *./6 F4CCCC
6CC ml aavin delight lamin. 2aper F4CCCC *.%6 *C*%CCC
%CCC ml laminated paper *F*CCCC 6.%6 %6C/GCCC
*CC ml tertra trays *CCCCC 4.CC GCCCCC
%CCC ml tetra trays /DCCCC F.6C /6%6CCC
3avin delight 6CC ml cartons 6CCCC %4.CC DCCCCC
.hrink "ilm in kg %*CCC %C6.CC %*9CCCC
T&'() 3#*#*125
BUDGET FOR MILK S!EETS FOR 2##$-1#

..&(
. &31, (" T7, 13T,'35.
I)3&TT
8 '3T,
-35),
'..
P(+,-.% M('/0-()
2archment paper roll Egs DCC %DG.6D %*6CCC
*6C gm plastic sweet box &o %*CCCC /.6C 4*CCCC
.ticker and tape rolls &os /CCCCC
6 ply corton &o FCCC %9.CC %44CCC
6C gm khoa carton &o *C6CCC C.*6 6*CCC
*CC gm badam mix =ar &o

T&'() 1#41###
C&.123(4)/1
.ugar kg */CCC **.CC 6C9CCC
:ram flour kg D6C 46.// /4CCC
1aida flour kg %CCC /C.CC /CCCC
Cardamam kg G D6C.CC 9CCC
Cashew nut kg 6CC /6C.CC %D6CCC
Corn flour *6C 4C.CC %CCCC
Badam &ut 6C D6C.CC /D6CC
,ssence 0 powder *6 FCC.CC **6CC
52: cylinder 66
%CCC.C
C 66CCC
(ther consumables 6CCCC
7igene chemical 0 cleaning compounds /CCCC

T&'() $55###

SCOPE OF THE PERFORMANCE BUDGET
The budget for operation and maintenance activities will be called performance budget
operation. This, in effect means that all financial targets in the budget will be based on
performance targets in physical terms. The current budgetary control system operation phase
envisages generation and transmission line pro=ects as independents investment centers. t
becomes applicable to a pro=ect in the year in which it plans to commercialize its first generation
unit. 7owever, the budgeting for expenses #net of revenue> from the date of synchronization to the
date of commercial generation #i.e. during trail run> is to be taken in case of in the capital budget
of the respective pro=ect. .imilarly, in the case of transmission line pro=ect, the system becomes
applicable from the year in the date commercial generation of the first unit of generating pro=ect,
with which this line is associated, whichever is later. "or subse!uent lines, the ( 0 1 will be
prepared from the energization. The sum totals of budgets of the cost centers will be the budget
for the investment center. 7owever, the budget for the profit center will be worked out by
apportioning the revenue and cost of various cost centers to individualBs profits centers bases on
specified norms. The performance budget operation will consists of following budgets along with
the supporting schedules?
3. Budget balance sheet
B. Budget profit and loss account
C. 'evenue budget
n addition, separate budgets for revenue activities other than operation for research and
development consultancy contracts etc. The expenses in respect of developmental expenditure for
improvements, additions, replacement, renewals, balancing facilities etc., are of capital nature and
will be budgeted for in the construction budget of budgetary control system < construction phase.
To facilitate management control the system also envisages, phasing of these budgets into
monthlyJ!uarterly targets. The actual performance then will be reasons for variations will be
analyzed and established for taking corrective remedial actions. The scope also includes
pro=ections of internal resources for a period ranging from 6 to %6 years and updating of 6years
plan as well as perspective plan of the company.
STAGES IN THE FORMULATION OF PERFORMANCE BUDGET
The system provides for a two stages formulation for Mperformance budget$operationN the
stages are given below?
INITIAL PROPOSAL
n the initial proposal, the pro=ect is re!uired to indicate yearly targets. n he addition, to
furnishing basic information like synchronization and commercial generation dates Constraints on
coal operation at less than the designed specification, calorific value of raw material and lime
stone, material consumption in physical terms for items whose consumption value in 's.6 lakhs or
more, planned shut down for a maintenance and overhauling and norm for various operation
parameters provided for design specification and in the tariff agreements to the corporate budget
committee. n the initial proposals is planned to be submitted after considering these factors and
keeping in view the perspective plan of the organization, fixes as well as norms for various
operating parameters. These targets and norms are then communicated to all stations and
transmissions line offices in the last week of +uly to be used for formulating detailed budget in the
firm of final proposal.
FINAL PROPOSAL
Budgeted balance sheet, budgeted profit 0 loss account and budgets in the form of cash
budget along with the proposal will consist of detailed supporting schedules for each of the
investment center J cost center. This final proposal needs to be submitted to corporate center
within / weeks of receiving approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring performance
for cost centers and investment centers. The fre!uency and extent review and monitoring will be
done is under?
i. The monitoring of actual performance against budgeted targets for investment center J
profit center on monthly basis and for cost centers on !uarterly for remedial J corrective
actions.
ii. The review of performance budget on !uarterly basis to assess the anticipated
profitability.
The first step in the preparation of performance budget, ( 0 1 is formulation of maintenance
and overhauling schedules for Boiler and to which generation, then considering the grid demand,
the availability or inputs and factory problems. The utilization of capacity will be worked out on
month$month basis for the budget period the gross generation targets can be worked and
accordingly.
R/6(-01 7 3(-.'/.(.+/
n line, with costing system following three activities can represent ma=or classification of
repairs and maintenance.
%. 1a=or overhaul
*. 2reventive maintenance
/. Break down maintenance
&ormally budgeting will be done for the former two? under each activity separate estimates
will be prepared for consumption of materials and maintenance =obs. This estimation will be done
at each of the sub cost center wise details are re!uired to be mentioned. The consumption material
for repairs and maintenance will be classified into spares, lubricants, loose tools and plants,
consumables and others. The cost center wise total separately for three activities will be added to
arrive at summary of material consumption and maintenance =obs, which will be reflected in the
profit 0 loss account.
The material consumption especially of spares can be estimated based on the expected life
of various consumption J spears in the installed e!uipment the fre!uency of breakdowns in the
past and the re!uirement for prevented maintenance and ma=or overhauls. The actual life of
components may be different from that indicated in the manufacturerBs specification. Therefore, it
is very difficult t estimate re!uirements of spares. But this new station it will be advisable to
collect such information from old stations that have gained experience in this field. &ormally
maintenance of e!uipment through contractors should be avoided. But in certain areas, if the
expertise and in house capability or sufficient man power is not available, maintenance =obs can be
got done through contractors. .uch contracts will need to be listed out separately.
F(+'&08 7 %/./0() &9/0:/(;1
3ll the items of expenditures under this head will be estimated based on past trend with due
ad=ustment for policy changes. The estimates will be given by cost center needs for items
identified with respective cost centers. The total administrative cost of service cost centers will be
allocated between construction and ( 0 1 in the ration of capital expenditure and sales during the
respective years.
D/60/+-('-&.
This is to be charged as per ,. act from the year following the year in which assets have
been capitalized. This will be done separately by each of the cost centers on the basis of
capitalized value and rates of depreciation furnished by site finance and account for different
categories of assets. Cost center$wise depreciation will be added at total depreciation for the
investment center.
I.'/0/1' &. <-=/; +(6-'()
3s per existing accounting policy, the interest is to be charged to profit 0 loss account
based on the loan content in the capitalized assets restricted to total accrued interest on the actual
loans. "or budgeting purposes, interest will be worked on e!uated loan content or e!uated loan
whichever is less.
E>2('/; )&(. +&.'/.'
,!uated loan content is to taken as 6CL if total capital cost and ad=usted for number of
operating months in respective years. n case of both generating factory and transmission lines
with associated factory, the cost for each profit center will be taker as per actual or anticipated
capital cost.
The e!uated loan content is to be individual unitBs transmission lines separately for each of
the phases J stages. The total capital cost will be taken as proposed in the performance budget
construction.
21 SUBJECT LITERATURE
INTRODUCION T# BUDGET? BUDGETING? BUDGETARY CONTROL
The management is efficient if it is able to accomplish the ob=ective of the enterprise. t is
effective when it accomplishes the ob=ectives with minimum effort and cost in order to attain
long$range efficiency and effectiveness management must chat out its course in advance. 3
systematic approach to facilitate effective management performance is profit planning and control
or budgeting. Budgeting is therefore an integral part of management in a way, a budgetary control
system has been described as a historical combination of a Mgoal setting machine for increasing an
enterprises profits and a goal achieving machine for facilitating organizational co ordination and
planning while achieving the budgeted targetsN.
MEANING OF BUDGET
t is a financial and !uantitative statement, prepared and approved prior to a defined period
of time of policy to be pursued during that period for purpose of attaining a given ob=ective. t
may include income, expenditure and employment capital. n other words is a pre$determined
detailed plan of action developed and distributed as a guide to current operations and as a partial
basis for the subse!uent evaluation of performance.
MEANING OF BUDGETING
The process of planning all flows of financial resources into within and from an entity
during some specified future period. t includes providing for the detailed allocation of expected
available future resources to pro=ects, functions, responsibilities and time periods.
"rom above definition it is clear that budgeting is the actual act of preparing the budget. t
is the process of evolving the final statement. Budget is the end product of budgeting.
MEANING OF BUDGETORY CONTROL
t is the process of establishing of departmental budgets relating the responsibilities of
executives to the re!uirements of a policy, and the continuous comparison of actual with budgeted
results, either to secure by individual action the ob=ectives of the policy a firm basis for its
revision. "irst of all budgets are prepared and then actual results are the comparison of budgeted
and actual figures will enable the management to find out discrepancies and take remedial
measures at a proper time. The budgetary control is continuous process, which helps in planning
and co ordination. t provides a method of control too. 3 budget is a means and budgetary control
is the end result. n the word of +.3 .olt Mbudgetary control is the system of management control
and accounting in which all operations are forecast and so as possible planned ahead and actual
results compared with the forecast and the planned ones.
ESSENTIALS OF BUDJECT
"inancial and !uantitative statement of action plan. 2ertaining to future period.
5aid down prior to the budget period during which it itBs followed. t is based on
management policy.
2lanning device and serves as a basic for performance evaluation and control.
ESSENTIALS OF BUDGTARY CONTOL
Budgeting or the process of preparing the budget is the starting point for budgetary control.
Distribution of budgets pertaining to each function to all the relevant section within
organization.
Collection of actual data pertaining to till budgeted activities.
Continuous comparison of actual performance with budgeted performance.
nitiation of corrective action to ensure that actual performance is in line with budgeted
performance.
'evision of budgeted if it is felt that the budgets prepared are no longer relevant on account
of unforeseen developments.
OBJECTIVES OF BUDGETARY CONTROL
The primary ob=ective of budgetary controlBs to help the management is systematic
planning and in controlling the operations of the enterprise. The primary ob=ective can be met only
of there is proper communication and coordination amongst different within the organization.
Thus the ob=ectives can be stated as?
1 PLANNING
Businesses re!uire planning to ensure efficient and maximum use of their resources. The
first step in planning is to define the broad aims and ob=ectives of the business. Then, strategies to
achieve the desired goals are formulated and tentative schedule of eh proposed combinations of
the various factors of production, which is the most profitable for the defined period. Budget
influences strategies that need to be followed by the originations. t cultivates forced planning
aiming managers.
2 CO-ORDINATION
Co$ordination is managerial functions under which all factors of production and all
departmental activities are balanced and integrated achieve the ob=ectives of the organization.
Budgeting provides the basis for individual in all departments to exchange ideas on how best the
organizations ob=ectives can be realized. ,xecutives are forced to think of the relationship between
their department and the company as a whole. This removes unconscious bases against other
departments. t also helps to identify weaknesses in the organization structure.
3 COMMUNICATIONS
3ll people in the organization must know the ob=ectives, policies and performances of the
organizations. They must have a clear understanding of their part in the organizations goals. This
is made possible by ensuring their participation in the budgeting process.
4 CONTROLS AND PERFORMANCE EVALUTION
Control ensures control by continuous comparison of actual performance with the
budgeted performance. -ariances are highlighted and corrective action can be initiated. BudgetBs
also from the basis of performance evaluation in an organization as they reflect realistic estimates
of acceptable and expected performance.
BUDGET? BUDGETING AND BUDGETARY CONTROL
3 budget is B5), 2'&T of a plan expressed in a !uantitative terms. Budgeting is a
techni!ue for formulating budgets. Budgetary control relates to the principles, procedures, and
practice of achieving given ob=ectives thorough budgets.
"rom the above definitions we can differentiated the three terms as budgets are the
individuals ob=ectives of a department, etc, where as budgeting may be said to be the act of
building budget. Budgetary control embraces all and in addition includes the science of planning
the budgets to effect on overall management tool for the business planning and control.
ESSENTIALS OF BUDGETARY CONTROL
The proper organization is essential for the successful preparation, maintenance and
administration of budgets. 3 budgetary committee is formed which comprises the departmental
heads of various departments. 3ll the functional heads are entrusted with the responsibility if
ensuring proper implementation of their respective departmental budgets.
1 CHIEF E@ECUTIVE
The chief executive is the overall in charge of budgetary system. 7e constitutes a budget
committee for preparing realistic budgets. 3 budget officer is the convener of the budget
committee who co$ordinates the budgets of different departments. The managers of different
departments are made responsible for their departmental budgets
2 BUDGET COMMITTEE
3 budget committee is formed to assist the budget officer. The heads of the entire important
departmentBs are made members of this committee. The committee is responsible for preparation
and execution of budgets. The members of this committee put up the case of their respective
departments and help the committee to take collective decisions, if necessary.
The budget committee is responsible for reviewing the budgets prepared by various functional
heads. Co ordinate all the budgets and approve the final budgets, the budget officer acts as
coordinator of this committee. 3ll the functional heads are entrusted with the responsibility of
ensuring proper of ensuring proper implementation of their respective final departmental budget.
3 BUDGET OFFICER
The chief executive appoints budget officer. .uch budget officer also called as Mbudget
controller or budget directorN. 7is rank should be e!ual to other functional managers. The budget
officer does not have the direct responsibility of preparing the budgets. The various functional
managers prepare the budgets. 7is role is that of a supervisor. The budget officer has the specific
duty of administering the budget. 7e is responsible for timely completion of budgeting activity by
various departments and for co$ordination between them so that there is a proper link between
them. 7e is empowered to scrutinize the budgets prepared by different functional heads and to
make changes in them. f the situation so demands. The budget officer works as a coordinator
among different department. 7e continuously monitors the actual performance of different
departments. 7e determines the deviations in the budgets and takes necessary steps to rectify the
deficiencies, if any. 7e also informs the top management about the performance of different
department. The budget officer will be able to carry out his work only if is conversant with the
working of all the departments he must have technical knowledge of the business and should also
possess accounting knowledge
4 BUDGET COMMITTEE
3 budget committee is formed to assist the budget officer. The heads of the entire
important departmentBs are made members of this committee. The committee is responsible for
preparation and execution of budgets. The members of this committee put up the case of their
respective departments and help the committee to take collective decisions, if necessary. The
budget committee is responsible for reviewing the budgets prepared by various functional heads.
Co ordinate all the budgets and approve the final budgets, the budget officer acts as coordinator of
this committee. 3ll the functional heads are entrusted with the responsibility of ensuring proper of
ensuring proper implementation of their respective final departmental budgets.
5 BUDGETS CENTERS
3 budget centers is that part of the organization for which the budget is prepared. 3 budget
center may be a department, section of a department or any other part of the department. deally,
the head of every center should be a member of the budget committee. 7owever, it must be
ensured that each budget center at least has an indirect representation in the budget committee.
The establishment of budget centers is essential for covering all parts of the organization
becomes easy. ;hen different centers are establishment, the budget centers are also necessary for
cost control purposes.
5 BUDGET MANUAL
a> 3 budget manual is a document that spells out the duties and responsible of the various
executives concerned it specifies among various functional areas. 3 budget manual covers
the following matters.
b> 3 budget manual clearly defines the ob=ectives of budgetary control system. t also gives
the benefits and principles of this system.
c> The duties and responsibilities of various persons dealing with preparation and exec ton of
budgets are also given in a budget manual. t enables the management to know the persons
dealing with various aspects to budgets and provides clarity on their duties and
responsibilities,
d> t gives information about the sanctioning authorities of various budgets. The financial
powers of different managers are given in the manual for enabling he spending amount on
various expenses.
e> 3 proper table for budgets including the sending of performance reports is drawn so that
every work starts in time and systematic control is exercise.
f> The specimen forms and number of copies to be listed for budget repots is also stated.
Budget involved should be clearly stated.
g> The length of various budget periods and control points is clearly given.
h> The procedure to the followed in the entire system is clearly stated.
i> 3 method of accounting to be used for various expenditures is also stated in the manual.
The budget manual helps in documentation the role of every employee, his duties,
responsibilities the ways of undertaking various tasks etc. thus it also in reducing ambiguity at any
point of time.
* BUDGET PERIOD
3 budget period is the length of time for which a budget is prepared. t depends upon a
number of factors. The choice of a budget period depends upon the following considerations. The
types of budget #longJshort>
The nature of demand for the products.
The timings for the availability of the finance.
The economic situations of the cycles.
3ll the above mentioned factors are taken into account while fixing the period of budgets.
n this budgeting process the financial manager has to take the financial decision on the budgets.
The financial manager usually responsible for organizing this budget, he must perform the
following functions.
To decide the general policies and guidelines.
To officer technical advice
To suggest changes
To receive and review individual budget estimates
To reconcile divergent views
To co$ordinate Budgeting activities.
To approve budgets with or without revisions. To scrutinize control reports later on
To scrutinize budget repots later on
CONTINUOUS BUDGETING SYSTEM
3 continuous budgeting system is a method of having two different budget periods within
the same budget. The purpose of having this system is to have greater control in terms of
operational activities without losing sight is to have greater control in terms of it results in
incorporating the effect of changes in the short term on the long$term targets of the organization.
DETERMINATION OF KEY FACTOR
The budgets are prepared for all functional areas. These budgets are interring dependent
and inter$related. 3 proper co$ordination among different budgets is necessary for budgetary
control to be successful. The constraints on some budgets may have an effect on other budgets
too. 3 factor which influences all other budgets is known as Mkey factor or principal factorN.
The key factor may not necessity remain the same. The raw materials supply may be limited at
one time but it may be easily available at another time. .imilarly, other factors may also improve
at different times. The key factor highlights are limitations of the enterprise. This will enable the
management to improve the working of these departments where scope for improvement exists
BUDGETARY CONTROL METHODS
a> BUDGETA 3 formal statement of the financial resources set aside for carrying out specific
activities in a given period of time. t helps to co$ordinate the activities of the organization. 3n
example would be an advertising budget or sales force budget.
b> BUDGETARY CONTROLA 3 control techni!ue where by actual results are compared with
budgets. 3ny differences #variances> are made the responsibility of key individuals who can
either exercise control action or revise the original budgets. Budgetary control and
responsibility centersA These enable managers to monitor organizational functions. 3
responsibility centre can be defined as any functional unit headed by a manager who is
responsible for the activities of that unit.
There are four types of responsibility centers?
%. R/9/.2/ +/.'/01A n (rganizational unit outputs are measured in monetary terms but are not
directly compared to input costs.
*. E=6/.1/ +/.'/01A )nits where inputs are measured in monetary terms but outputs are not.
/. P0&<-' +/.'/01A t is where the performance is measured by the difference between revenues
#outputs> and expenditure #inputs>. nter$departmental sales are often made using @transfer
prices@.
4. I.9/1'3/.' +/.'/01A t is where the outputs are compared with the assets employed in
producing them, i.e. '(.
PROCESS OF BUDGETARY CONTROL
The exercise of budgetary control involves following steps
%. The establishment of budgets for each section or department of the organization.
*. The measurement of the actual performance.
/. The continuous comparison of actual performance with the budgeted performance, so as to
determine the deviation or variance.
4. The ascertainment of reasons for such variance and taking suitable actions to remedy the
defect in order to achieve the ob=ectives under the original policy or to provide a basis for its
revision.
REQUISITES FOR A SUCCESSFUL BUDGETARY CONTROL SYSTEM
"or making a budgetary control system successful re!uisites are re!uired.
1 CLARIFYING OBJECTIVES
The budgets are used to realize ob=ectives of the business. The ob=ective must be clearly
spelt out to that budgets are properly prepared. n the absence of clear goals, the budgets will also
be unrealistic.
2 PROPER DELEGATION OF AUTHORITY AND RESPONSIBILITY
Budget preparation and control is done are every level of management. ,ven though
budgets are finalized at top level but involvement of persons from lower levels of management is
essential for their success. This necessitates proper delegation of authority and responsibility.
3 PROPER COMMUNICATION SYSTEM
3n effective system of communication is re!uired for a successful budgetary control. The
flow of information regarding budgets should be !uick so that these are implemented. The upward
communication will help in knowing the difficulties in implementation of budgets. The
performance reports of various levels will help top management in budgetary control.
4 BUDGET EDUCATION
The employees should be educated about the benefit of budgeting system. They should be
the benefits of budgeting system they should be educating about their roles in the success of this
system. Budgetary control may not be taken only as a control device by the employees but it
should be used as a tool to improve their efficiency.
5 FLE@IBILITY
"lexibility in budgets is re!uired to make them suitable under changed circumstances.
Budgets are prepared for the future, which is always uncertain, even though budgets are prepared
by considering the future possibilities but still some ad=ustment. "lexibility makes the budgets
more appropriate and realistic.
5 MOTIVATION
Budgets are to be implemented by human beings. Their successful implementation will
depend upon the interest shown by the employees. 3ll persons should be motivated to improve
their working so that budgeting is successful. 3 proper system of motivation should be introduced
for making this system a success.
TYPES OF BUDGET
1 LONG -TERM BUDGETS
The long$term budgets prepared for a long period of five to ten years. They are concerned
with planning the operations of a firm over a considerably long period of time. The financial
McontrollerN exclusively for the top management usually prepares long$term budgets. These budgets
are very useful in terms of physical units #i.e. !uantities> or percentages, since accrued values may
be difficult to forecast over such long$period. Capital expenditure, research and development
budgets, etc, are examples of long$term budgets.
2 SHORT TERM BUDGETS
.hort$term budgets are budgets prepared for a short period of one to two year. They are
prepared for those activities the trend in which cannot be for seen easily over long periods. These
budgets are very useful in case of consumer goods industries such as sugar, cotton, textiles, etc. they
are generally prepared in terms of physical units #i.e... !uantities> as well as monetary units #i.e.
values> materials budget. ,ach budget etc, are example of short$term budget. They are useful to
lower level of management for control purpose.
3 CURRENT BUDGETS
Current budget is a budget, which is established for use over a short period of time and is
related to current conditions. Thus current budgets are essentially short term budgets ad=usted to
current #i.e., present or prevailing> condition or circumstances. They are prepared for a very short
period. .ay, a !uarter or a month. They related to current activities of the budgets.
4 INTERIM BUDGETS
nterim budgets are budgets, which are prepared in between two budget periods. These
budgets may get integrated with the budget of the following period.
CLASSIFICATION OF BUDGETS ACCORDING TO CONTENT
Budgets may be classified into budgets in physical terms and into budgets in monetary
terms.
AB BUDGETS IN PHYSICAL TERMS
Budgets in physical terms are budgeted that budget in terms !uantities only. They do not
include corresponding rupee value. 5ong$term budgets are usually prepared in physical terms.
,xamples of such budgets are production budgets, material budget etcO
BB BUDGETS IN MONETARY TERMS
Budgets in monetary terms are budgets that budget in terms of !uantities as well as their
corresponding rupee value, sales budget, purchase budget, etc are example of such budgets. Budget
such as cash budget, capital expenditure budget etc. that may not have physical !uantities also from
part of budgets in monetary terms.
CLASSIFICATION OF BUDGETS ACCORDING TO FUNCTION
Budgets can be classified into?
%. (perating budgets
*. "inancial budgets
/. 1aster budgets
1B OPERATING BUDGET
These budgets relate to different activities or operations of a firm. The number of such
budgets depends upon the size and nature of the business, the commonly used operating budgets
are?
%> .ales budgets
*> 2urchase budgets
/> 'aw material budgets
4> 5abor budgets
6> "actory utilization budget
9> 1anufacturing expenses or works overhead budget
D> 3dministrative and selling expenses budget etc.
The operating budget for a firm may be constructed in terms of programmed or responsibility
areas, and hence may consist of?
a> 2rogrammed budget
b> 'esponsibility budget
a> P0&%0(33/; 42;%/'
t consists of expected revenues and costs of various products or pro=ects that are Termed as
the ma=or programmer of the firm, such a budget can be prepared for each product line or pro=ect
showing revenues, cost and the relative profitability of the various in locating areas where efforts
may be re!uired to reduce costs and increase revenues. They are also useful in determining
imbalance and inade!uacies in programmers so that corrective action may be taken in future.
b> R/16&.1-4-)-'8 42;%/'1
;here the operating budget of a firm is constructed in terms of responsibility areas, such a
budget shows the plan in terms of persons responsible for achieving them. t is used by the
management as a control them. t is used by the management as a control device to evaluate the
performance of executives who are in charge of various cost centers. Their performance is compared
to the targets #budgets>, set for them and proper action is taken for adverse results.
'esponsibility areas may be classified under three broad categories?
%. Cost Jexpense center
*. 2rofit center
/. nvestment center
2B FINANACIAL BUDGETS
"inancial budgets are concerned with cash receipts and disbursements, working Capital,
financial position and results of business operations. The commonly used financial budgets include
cash budget, working capital budget and income statement budget, statement of retained earnings
budget, budgeted balance sheet or position statement budget.
3B MASTER BUDGETS
The master budget is the summary budget incorporating its functional budgets. 3ll The
operational and financial budgets are integrated into the master budget. The budget officer for the
benefit of the top level management prepares this budget. This budget is used to coordinate the
activities of various functional departments. t is also used as an effective control device.
CLASSIFICATION ON THE BASIS OF FLE@IBILITY
A FI@ED BUDGET
3ccording to C13 5ondon a fixed budget is a budget which is designed to 'emain
unchanged irrespective of the level of activity actually attained it is based on a fixed volume of
activity and shows one volume of output and related cost. t is not ad=usted according to the actual
level of activity attained. 3 fixed budget is useful only when the actual level of activity
corresponds with the budgeted level of activity. But this generally does not happen as such a fixed
budgets is not useful for managerial purposes.
B FLE@IBILE VARIABLE SLIDING SCALE OR CONTROL TYPE
BUDGETS
3ccording to C13 5ondon a flexible budget is a budget which is designed to Change in
accordance with the level of activity actually attained. Thus a flexible budget changes according to
the change in the level of activity. n other words it provides the budgeted costs at any level of
activity. Business activity cannot be accurately predicted on account of uncertainties of Business
environment. 3 flexible budget contains several estimates for different assumed circumstances
instead of =ust one estimate, it provides for automatic ad=ustments with changes in the volume of
activity. 7ence, a situation is operating in an unpredictable environment.
PERFORMANCE BUDGETING
MP/0<&03(.+/ B2;%/'-.%N had its origin from )...3 after second world. t tries to rectify
some of the short coming in the traditional budget. n the traditional budget amounts is earmarked
for the ob=ects of expenditure such as salaries, travel, office expenses, grant$in$aid etc. n such
system of budgeting the money concept was given more prominence i.e. estimating or pro=ecting
rupee value for the various accounting heads or classification of revenue and cost. .uch system of
budgeting was morel popularly used in government department and much business enterprise. But
each and every system of budgeting control of performance in terms of physical units or related
costs cannot be achieved.
These days budgets are established in such a way so the item of expenditure is related to
specify responsibility center and is closely linked with performance if that standard. Developing
work programs and performance expenditure follows a three tier pattern viz., function, program,
activity.
3dvantages of performance budgeting?
t presents clearly the purpose and ob=ectives for which funds are re!uired. t gives better
appreciation of budgeting by legislature.
t improves budget formulation process.
t enhances accountability if the executives.
ZERO BASED BUDGETING
Pero$based budgeting is the latest techni!ue of budgeting and it has increased use as a
managerial tool. This techni!ue was first used in 3merica in %F9*, by the former president
3merica, +immy Carter.
3s the name suggests, it is starting from a MscratchN, the normal techni!ue of budgeting is
to use previous years cost levels as a base for preparing this yearBs budget. This method carries
previous years inefficiencies to the present year because we taken last year because we taken last
year as a guide, and decide Mwhat is to be done this year when this much was the performance of
the last yearN.
n zero based budgeting every year is taken as a new year and previous year is not taken as
a base, the budget for this year will have to be =ustified according to present situation, zero is taken
as a base and likely future activities are decided according to present situations. n zero base
budgeting a manager is to =ustify why he wants to spend. The performance of spending on various
activities will depend upon their =ustification and priority for spending will have to be proved that
an activity is essential and the amounts asked for are really reasonable taking into account the
volume of activity.
STEPS IN ZERO BASE BUDGETING
%. dentification of decision units in order to =ustify each expenditure in their proposed budget.
*. 2reparation of decision packages. ,ach package is a separate and identifiable activity.
These packages are linked are linked with corporate ob=ectives.
/. 'anking of decision packages based on cast benefit analysis.
4. 3llotment of funds based on the above resulting by following pyramid ranking system to
ensure optimum results.
M/':&;&)&%8
.econdary data were obtained from the Central Bank of &igeria as contained in their
,conomic and financial indicators bullion as well as their 3nnual reports and statement of accounts
from %FG9 $ *CCC. This information was sub=ected to analysis, discussion and interpretation using
appropriate tools
F-.;-.%1
This study is necessitated by the need to undertake an in depth appraisal and budgetary
control measures in &igeria as to gauge their effectiveness. "urthermore, in recent times literatures
are limited with regards to budgetary control. 2ractices and procedures in &igeria. This can be
partially attributed to the fact that, the control mechanisms were never adhered to thus resulting in
budget implementation failures. There has therefore not been any established laid down procedure
for the implementation of budget in milk, with the advent of democracy. This bad practice of non$
implementation of budget to the letter has continued unabated thus becoming the ma=or source of
friction between the ,xecutive and the 5egislative arm of government. This study is intended to
unveil those factors that are responsible for poor budget implementation fre!uently leading t heir
failures while also highlighting the control mechanisms re!uired for a successful budget
implementation. t is therefore the opinion of the authors that the findings of this study will
translate to a good reference material for academics, financial institutions, governments and the
public in general in budgeting.
DATA ANALYSIS AND INTERPRETATION
REVENUE BUDGET
FOR 2#1#-11
TABLE-I
CR1 -. +0&0/1B
S) N& P(0'-+2)(0
B2;%/'/;
E1'-3('/; <&0 ':/
2#1#-11
C1B
A+'2() <&0 ':/ 8/(0
2#1#-11
C2B
V(0-(.+/
C1B-C2BDC3B
P/0+/.'(%/
C3B"C1B
% S()/1 3mount L 3mount L
F-=/; C&1'
0/+&9/08
D*4 D*.4 9%G 9%.G %C.9 %4.9
V(0-(4)/
C&1'
R/+&9/08
G4C G4.C D4C D4.C %C %%.F
F2/) 60-+/
(;E21'3/.'
0/+&9/08
G*C G*.C G9/ G9./ $4./ $6.*
OF.
+&.1236'-&.
%/* %/.* %4G %4.G $%.9 $%*.%
T&'() &< 1 *6%9 *6%.9 */9F */9.F %4.D 6.G4
*
A9/0(%/
-.'/.1-9/1
%C* %C.* FG F.G C.4 /.F*
/
O':/0
I.+&3/
69 6.9 4F 4.F C.D %*
GRAND 25*4 25*4 2515 2515 15G 5$#
TOTAL
C1H2H3B
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year
*C%C$%% and represented in table $%. The aspect included are total generation in #crores 's> and
utilization for auxiliary consumption respectively.
During the year *C%C$%% the sales, fixed costs, variable cost, own Consumption was
decreased. ;hen the estimated budget so sales consumption is *9DL respectively.
During the year *C%C$%% the average intensive are decreased F.GL.
The other income also decreased DL respectively.
REVENUE BUDGET
FOR 2##$-1#
TABLE-II
CR1 -. +0&0/1B
S)
N&
P(0'-+2)(0
B2;%/'/;
E1'-3('/; <&0
':/ 2##$-1#
C1B
A+'2() <&0 ':/
8/(0 2##$-1#
C2B
V(0-(.+/
C1B-
C2BDC3B
P/0+/.'(%/
C3B"C1B
% S()/1 3mount L 3mount L
F-=/; C&1' 0/+&9/08 DC* DC.* 6FG 6F.G %C.4 %4.G%
V(0-(4)/ C&1'
R/+&9/08
G4C G4.C 9GC 9G.C %*.* %6.*%
F2/) 60-+/
(;E21'3/.' 0/+&9/08
DFC DF.C G6* G6.* $9.* $D.G
OF. +&.1236'-&. %*% %*.% %** %*.* $C.% $C.G*
T&'() &< 1 */FG */F.G *%9G *%9.G */ F.6
* A9/0(%/ -.'/.1-9/1 F9 F.9 G4 G.4 %.* %*.6
/ O':/0 I.+&3/ 6% 6.% 4C 4.C %.% *%.6
GRAND TOTAL
C1H2H3B
2545 2545 22$2 22$2 253 $$4
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year
*CCF$%C and represented in table $*. The aspect included are total generation in #crores 's> and
utilization for auxiliary consumption respectively.
During the year *CCF$%C the sales, fixed costs, variable cost , own Consumption was
decreased. ;hen the estimated budgeted of sales consumption is *64.6L respectively.
During the year *CCF$%C the average intensive are decreased by %/L.
The other income also decreased by %%L respectively
REVENUE BUDGET
FOR 2##G-#$
TABLE-III
B2;%/'/;
A+'2() <&0 ':/
/1'-3('/; <&0
S).& P(0'-+2)(0 8/(0 2##G-#$ V(0-(.+/
P/0+/.'(%
/
':/ 2##G-#$
C2B C1B-C2BDC3B C3B"C1B
C1B
1 S()/1
3mou
nt L
3mou
nt L
"ixed cost
recovery 96D 96.D 696 69.6 F.* %4.C
-ariable cost
recovery D9* D9.* 69/ 69./ %F.F *9.%%
ad=ustment
recovery D6C D6.C DFG DF.G $4.G $9.4
(wn consumption %*% %*.% %C* %C.* %.F %6.DC
T&'() 1 **FC **F.C *C*G *C*.G *9.* %%.44
&<
2
A9/0(%/
-.'/.1-9/1 GF G.F G4 G.4 .6 6.9
3 O':/0 -.+&3/ 6% 6.% 4C 4.C %.% *%.69
GRAN
D TOTAL
243# 243# 2152 2152 2*G 1144
C1H2H3
B
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year *CCF$%C
and represented in table $/. The aspect included are total generation in #crores 's> and utilization
for auxiliary consumption respectively.
During the year *CCF$%C the sales, fixed costs, variable cost, own Consumption was decreased.
;hen the estimated budgeted for sales consumption is *4/.CL respectively.
During the year *CCF$%C the average intensive are decreased 6L The other income also
decreased %%L respectively
REVENUE BUDGET
FOR 2##*-#G
TABLE-IV
CR1 -.
+0&0/1B
B2;%/'/;
A+'2() <&0 ':/
8/(0
/1'-3('/; <&0
':/ S).& P(0'-+2)(0 2##*-#G V(0-(.+/ P/0+/.'(%/
2##*-#G
C2B C1B-C2BDC3B C3B"C1B
C1B
1 S()/1
3mou
nt L 3mount L
"ixed cost
recovery 9GC 9G.C 69F 69.F %%.% %9./*
-ariable cost
recovery DGF DG.F 9*/ 9*./ %9.9 *%.C/
ad=ustment
recovery 9F6 9F.6 G%* G%.* $%%.D $%9.G/
(wn consumption %*% %*.% %** %*.* $.% $.G*
T&'()
&< 1 **G6 **G.6 *%*9 *%*.9 %6.F 9.F
2
A9/0(%/
-.'/.1-9/1 F9 F.9 G4 G.4 %.* %*.6
3 O':/0 -.+&3/ 6% 6.% 4C 4.C %.% *%.69
GRAN TOTAL 2432 2432 225# 225# 1G2 *4
D
C1H2H3
B
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year *CCD$CG
and represented in table $4. The aspect included are total generation in #crores 's> and utilization
for auxiliary consumption respectively.
During the year *CCD$CG the sales, fixed costs, variable cost, own Consumption was decreased.
;hen the estimated budgeted for sales consumption is *4/.*L respectively.
During the year *CCD$CG the average intensive are decreased %/L the other
ncome also decreased by %%L respectively.
O6/0('-&.() E=6/.;-'20/ B2;%/'
F&0 ':/ Y/(0 2##$-1#
TABLE I II
CR1 -.
+&0/01B
B2;%/'/; /1'-3('/;
A+'2() <&0 ':/
8/(0 V(0-(.+/ P/0+/.'(%/
S).& P(0'-+2)(0 <&0 ':/ 2##$-1# 2##$-1# C1B-C2BDC3B C3B"C1B
C1B C2B
AMOUN
T
RS"M
T
AMOUN
T S"MT
1 VARIABLE
G4% G4.% G** G*.*
%.F *.*
COST
OPERATIVE
2 MAINTENA
NC *4D *4.D *C% *C.% 4.9 %G.9
E COST
3
FINANCE
CHARGES
Deprecation /F /.F %* %.*
*.D 9F.*
nterest on
fixed
%6 %.6 %G %.G
$./ $.*
capital
T&'() &< I 3 54 54 3# 3#
24 444
GRAND
G$ **
TOTAL 1142 1142 1#53 1#53
C1H2H3B
INTERPRETATION
(bserved from the above table that the operational expenditure budget *CCF
$*C%C1aintenance, employee cost, stationary 0 general expenses, rebate and share of
other expenses is all are fluctuating with the expenses of the year *CCF$%C. 7owever the
total operating maintenance costs are *4.DL decreasing respectively.
n finance charges depreciation and interest on fixed capital, has been included.The total
finance charges recording decreasing of *.4L in the year *CCF$%C respectively
F&0 ':/ Y/(0 2##G-#$
TABLE I III
R1 -.
+0&0/1B
B2;%/'/; /1'-3('/;
A+'2() <&0
':/ V(0-(.+/ P/0+/.'(%/
S).&
P(0'-+2)(0 <&0 ':/ 2##G-#$ 8/(02##G-#$ C1B-C2BDC3B C3B"C1B
C1B C2B
AMOUN
T J
AMOUN
T J
1
VARIABLE
G%% G%.% DFG DF.G
%./ %.9
COST
OPERATIVE
6.D *9.9
2
MAINTENA
NC *%4 *%.4 %6D %6.D
E COST
3 FINANCE
CHARGES
Deprecation /9 /.9 %% %.%
*.6 9F.4
nterest on
fixed
%6 %.6 %G %.G
$./ $.*
capital
T&'() &< I 3 51 51 2$ 2$
22 4313
GRAND
$2 G5
TOTAL 1#*5 1#*5 $G4 $G4
C1H2H3B
INTERPRETATION
(bserved from the above table that the operational expenditure budget of aavin salem .
of the year *CCG$*CCF.
1aintenance, employee cost, stationary 0 general expenses, rebate and share of other
expenses is all are fluctuating with the expenses of the year *CCG$CF. 7owever the total
operating maintenance costs are *%.4L decreasing respectively.
n finance charges depreciation and interest on fixed capital, has been included
The total finance charges recording decreasing of *.*L in the year *CCG$CF respectively
O6/0('-&.() E=6/.;-'20/ B2;%/'
F&0 ':/ Y/(0 2##*-#G
TABLE I IV
CR1 -.
+&0/01B
B2;%/'/;
/1'-3('/;
A+'2() <&0 ':/
8/(0 V(0-(.+/ P/0+/.'(%/
S).& P(0'-+2)(0 <&0 ':/ 2##*-#G 2##*-#G C1B-C2BDC3B C3B"C1B
C1B C2B
AMOUN
T J AMOUNT J
1
VARIABLE
D64 96G 96.G
F.9 %*.D
COST D6.4
OPERATIVE
9./ /%.G
%FG %F.G %/6 %/.6 2
MAINTENA
N
CE COST
3
FINANCE
CHARGES
Deprecation *F *.F F C.F
* 9G.F
nterest on
fixed
%6 %.6 %G %.G
$./ $.*
capital
T&'() &< I 3 44 44 2* 2*
1* 3G5
GRAND
1*5 1*5*
TOTAL $$5 $$5 G2# G2#
C1H2H3B
INTERPRETATION
(bserved from the above table that the operational expenditure budget of aavin dairy
products for the year *CCD$CG.
1aintenance, employee cost, stationary 0 general expenses, rebate and share of other
expenses is all are fluctuating with the expenses of the year *CCD$CG. 7owever the total
operating maintenance costs are %F.GL decreasing respectively.
n finance charges depreciation and interest on fixed capital, has been included.The total
finance charges recording decreasing of 6./L in the year *CCD$CG respectively.
The overall budgets results of avian diry is earning more profit
FINDINGS
The variance calculated in revenue budget during the year *C%C$%% has decreased
by 6.FCL when the actual budget is compared with the estimated budget.
The variance calculated in revenue budget during the year *CCF$%C has decreased
by F.F4Lwhen the actual budget is compared with the estimated budget.
The variance calculated in revenue budget during the year *CCG$CF has decreased
by %%.44L when the actual budget is compared with the estimated budget.
The variance calculated in revenue budget during the year *CCD$CG has decreased
by D.4GL when the actual budget is compared with the estimated budget
The variance calculated in operational expenditure budget during the year *C%C$%%
has earned profit by G.9L when actual expenditure budget is compared with
estimated expenditure budget.
The variance calculated in operational expenditure budget during the year *CCF$%C
has earned profit by D.DLL when actual expenditure budget is compared with
estimated expenditure budget.
The variance calculated in operational expenditure budget during the year *CCG$CF
has earned profit by G.6L when actual expenditure budget is compared with
estimated expenditure budget.
The variance calculated in operational expenditure budget during the year *CCD$CG
has earned profit by %D.D9L when actual expenditure budget is compared with
estimated expenditure budget.
SUGGESTIONS
2lanning has become the primary function of management most of the planning relates
to individual and individual proposals. Budgets are nothing but the expressions, largely
in financial terms. Budgetary control has, therefore become and essential tool of
management for controlling and maximizing profits.
The companyBs ob=ectives and how it can be achieved through budgetary control
process.
Time tables for all stages of budgeting should be followed regularly by all the
departments.
'eports, statements, forms and other record should be maintained if any
information is needed.
Continuous comparison of actual performance with budgeted performance will
result in knowing whether the company is in profit or loss.
CONCLUSIONS
,very organization has pre$determined set of ob=ectives and goals, but reaching those ob=ectives
and goals only by proper planning and executing of the plans economically. 3avin dairy is
ob=ectives of planning promoting and organizing an integrated development of Cement
Company. The organization needs the capable personalities as management to lead the
organization successfully, the management makes the plans and implement of these plan are
expressed in terms of budget and budgetary control. The aavin dairy have budget process in two
stages. (ne is the capital expenditure budget and another is operating maintenance budget, the
capital expenditure budget shows the list of capital pro=ects selected for investment along with
their estimated cost, operating 0 maintenance budget refers to the repairs 0 maintenance
budgets, the special budgets are rarely used in the organization like long$term budgets, research
0 development budget and budget for consultancy.

BIBLIOGRAPHY
;,B.T,.
K www.google.com
K www.aavin.com
K www.aavindairy.com
K www.salemco$opmilkltd.com