Budget is a statement of proposed activity of the business in financial terms. It is also a tool of financial planning and control. It sets standards or targets of the business activities, to ensure an optimum but economical use of the business resources. Thus it is used to measure all the outcomes of the business activities against the actual. These deviations are termed as variance. All the differences between the actual and the budgeted are simply termed as budgetary variance. Here comes the control, or budgetary control. Depending on the variance senior managers needs to implement strategies to make the results more in favour. Some of the common strategies may includes like selling price reviews, cost factors reviews, changing the responsibilities of the outlet managers etc. some of the common budgetary control measures are –
- Make & review the proposed budget, and define the departmental targets in respect of expenditure, sales volume, revenue etc.
- Brief the departmental heads about their targets and discuss the possible ways to achieve it.
- Keep records of all the measurable activities on the regular/daily basis like, volume of production, processes, sales, purchase, store, errors, time of production etc.
- Make the variance report periodically and analyse to find out the loopholes and possible reasons there off.
- Implementing new policies or amending the present one to minimise the deviation.
- Follow the activities again and repeat the variance analysis periodically.
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