RELATIONSHIP WITH BUDGETARY CONTROL

Posted on | By Kalyan Bora

Relationship with Budgetary Control

How Does Cost Variation Relate to Budgetary Control?

  • Budgetary Planning: Budgetary control involves setting financial targets and comparing actual performance against these targets. Cost variations provide valuable insights into the effectiveness of budgetary planning and the accuracy of budget estimates.

What Role Does Cost Variation Play in Budget Monitoring?

  • Monitoring Performance: Cost variations serve as key indicators during budget monitoring processes. Deviations from budgeted costs can highlight areas where expenses are exceeding projections or where cost-saving opportunities exist.

How Can Cost Variations Impact Budget Performance?

  • Budget Deviations: Significant cost variations may result in deviations from the budgeted financial targets. Negative variations, such as higher-than-expected costs, can lead to budget overruns, while positive variations may indicate cost savings.

How Does Budgetary Control Help Manage Cost Variations?

  • Identifying Variances: Budgetary control involves analyzing variances between budgeted and actual costs to identify the root causes of variations. This analysis enables managers to take corrective actions to address cost discrepancies.

What Strategies Can Be Implemented to Align Cost Variations with Budgetary Targets?

  • Flexible Budgeting: Implementing flexible budgeting allows for adjustments to budgeted targets based on changes in activity levels or external factors. This flexibility helps accommodate cost variations and improves budget accuracy.
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See also  RESPONSIBILITY CENTERS

  1. DIFFERENT BUDGET APPROACHES
  2. ZERO-BASED BUDGETING (ZBB)
  3. PERFORMANCE BUDGETING
  4. RESPONSIBILITY CENTERS
  5. STANDARD COSTING
  6. CONCEPTS, USES, SETTING OF STANDARD COST ACCOUNTING METHODS
  7. COMPUTATION OF SIMPLE COST VARIANCES
  8. REASONS FOR VARIATION IN COSTS
  9. APPLICATION, IDENTIFICATION OF COST UNIT, DETERMINATION, AND CONTROL
  10. MARGINAL COSTING AND BREAK-EVEN ANALYSIS
  11. BASIC CONCEPTS
  12. MARGINAL COSTING VS. ABSORPTION COSTING
  13. COST-VOLUME-PROFIT ANALYSIS
  14. BREAK-EVEN ANALYSIS AND ITS LIMITATIONS
  15. BUDGETING
  16. BREAK-EVEN ANALYSIS AND ITS LIMITATIONS
  17. PROCESS COSTING
  18. JOINT PRODUCTS AND BY-PRODUCTS
  19. SERVICE OR OPERATING COSTING
  20. UNIT COSTING AND MULTIPLE COSTING
  21. JOB, BATCH, AND CONTRACT COSTING
  22. ADMINISTRATION, SELLING, AND DISTRIBUTION OVERHEADS: ANALYSIS, ACCOUNTING, CONTROL
  23. DIRECT EXPENSES: NATURE, COLLECTION, CLASSIFICATION
  24. FINANCIAL ACCOUNTING
  25. PRODUCTION OVERHEADS: COLLECTION, APPORTIONMENT, ABSORPTION
  26. LABOR COSTS: REMUNERATION METHODS AND TURNOVER
  27. OVERHEADS: NATURE, COLLECTION, CLASSIFICATION
  28. DIFFERENCES FROM MANAGEMENT AND COST ACCOUNTING
  29. COST CONCEPTS AND CLASSIFICATION
  30. COST CENTRE AND COST UNIT
  31. ELEMENTS OF COST
Category: MANAGEMENT ACCOUNTING AND CONTROL
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