Objectives of Budgetary Control

In the hand of management, budgetary control is a very advance tool for controlling the business. It is also part of accounting because for making the budget and comparing it with actual performance, we need past and current accounting data which is collected from financial statements. Main aim of budgetary control is to check the actual and budgeted data and fix the responsibility of related employee.


Now, explain the objectives in detailed way :- 






Variance Sheet


1. Analyze Actual and Budgeted Data 


One of the important objective of budgetary control is to analyze the actual and budgeted data. Whether we have made sale budget, production budget, cash budget  , budgeted income statement or any other budget, all are compared with actual data. When we compare the actual and budgeted data, we can reach the result for analysis. It is clear target, our actual revenue should more than our budgeted revenue and our actual cost must be less than our budgeted cost. If our find any adverse position, we can take the steps to find its main reason. Without finding these data, we never overthink or fear about our performance. 


2. Modify the Future Plan 


Sometime after finding reasons, we come to the point that our made budget is not suitable on the current situation. So, we modify the future plan according to current environment of business. To modify the future plan is also objective of budgetary control. For example, raw material is not receiving in the factory due to external reasons, Due to this, it is the chance of increasing of our production cost. So, we can modify our budgeted cost as per current conditions. It will motivate to our production manager to try best to reduce actual cost upto modify budgeted cost. 

3. Take the Corrective Actions 


This objective of budgetary control is the real way of controlling the business. Instead of taking tension, managers should be encourage to learn from mistakes. They should note the mistakes in the past which is shown in the adverse performance. A new will come with corrective actions. Only then, any business can achieve the budget target. 

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