This research work was focused on probe on the usage of budgeting as a tool for planning and control in a typical Fabrication Industry like Anambra Motor. Manufacturing company ( ANAMMCO LTD ) The aim of the survey is to decelerate the importance of budgeting as a tool for Planning and Control in Operations of Manufacturing Industry which this undertaking maximization as its rule aims. The research besides aims at placing the process adopted in the preparation of one-year budgets of ANAMMCO LTD. Based on this. the undermentioned hypothesis were formulated for the survey. The hypothesis are: 1. Directors use budgeting as a tool for planning and control in achieving the ends of the concern 2. Decision devising is performed in a fabrication industry utilizing budgeting. 3. Use of resources is achieved with the usage of budgeting and budgetary control. Following the probe and analyzation of informations. the following determination were made: 1. The organisation uses budgeting in accomplishing the ends and aims. 2. The chief aims of the organisation are inareimization of net income. 3. Efficiency and effectivity of the organization’s operations is enhanced through the usage of budgeting etc. From the findings. the decision were assured budgeting is a really indispensable and dispensable pool for be aftering and control. It is prolonging the growing and enlargement of the organisation.
1. 1 BACKGROUND OF THE STUDY
Business organisation demand be aftering to accomplish their purposes and aims. A thorough planning in an organisation can non be done in concern without affecting the act of budgeting. The occupation of inco
rporating resources and undertakings for end attainment is a cardinal map of the direction of any organisation and one of the effectual tools of accomplishing these is be aftering. The cardinal rule of be aftering involves the choice of endeavor and departmental aims every bit good as finding of agencies of accomplishing them. Although be aftering itself is non an terminal to success. it is believed to be an assistance to it. hence. persons. including corporate organic structures. who failed to be after. hold planned to neglect. Budgeting trades with doing programs and monitoring activities to determine whether they conform to programs. Budgeting involves
co-ordination and control. Manufacturing industries can merely accomplish net income maximization by decently planned usage of available resources. This is sustained when different activities are expeditiously co-ordinate and determination pickings in the organisations are result oriented. The procedure of puting ends and aims to be achieved in future clip and finding how these ends are to be reached is described as planning. while the procedure of interpreting this planning into fiscal mark is what is described as short term tactical planning which is defined as “The procedure of fixing a short term and elaborate program of activities of an organisation and change overing the strategic long term program into action” . Ray H. Garrison. in his ain sentiment. defined budgets therefore “a budget is a elaborate program demoing how resources will be acquired and used over some specific clip interval. It represent a program for the hereafter expressed in formal quantitative footings. The act of fixing a budget is
called budgeting. The usage of budgets to command a firm’s activities is known as budgetary control” . Business organisation strives to accomplish good consequence in their activities. and do usage of budgets. Budgetary control includes the readying of budgets. organizing existent public presentation into that budgeted. and moving upon consequences to accomplish maximal profitableness. This survey is aimed at happening out the budgetary procedure used in accomplishing their ends. It besides aims at finding the controls applied in cost decrease and the comparing between the planned and existent public presentation. The Centre of the survey is Anambra Motor Manufacturing Company ( ANAMMCO ) Limited.
1. 2 STATEMENT OF PROBLEM
The direction has that primary responsibility of accomplishing the aim of net income maximization of the company. This end is much hindered during the period of economic depression. which features low capacity use. high involvement rates. and deficit of foreign exchange to purchase the needful natural stuffs. Management faced with the job of how to do usage of available scare resources in order to accomplish the aim of net income maximization. Thus. research work is intended to assist in finding and in foregrounding the jobs that militate against the application of use of budgeting as a tool for planning and control in a fabrication industry. The research work will supply solutions to the undermentioned jobs: 1.
Inability of the fabrication company’s budget to accomplish the company’s aims. 2. Insufficient assessment of the company’s public presentation based on budget. 3. Inability of officers in the cost Centres to conform to guidelines and attain the criterion set in the organisation. This is applicable to all workers. 4. Inadequate monitoring of conformity with and divergences from departmental and full budget.
1. 3 HYPOTHESIS
The followers are the footing for research in the survey:
1. Directors use budgeting in planning and control in achieving the ends of concern. 2. Decision devising is performed in a fabrication industry utilizing budgeting as a tool for planning and control. 3. Use of resources is achieved with the usage of budgeting and budgetary controls.
1. 4 Aim
Budgeting. planning. control are major constituents for successful direction in a fabrication industry. This cover the country of duties of direction and provides a yardstick for mensurating the degree of public presentation of such maps of direction. Hence the intent of this survey include the undermentioned: 1. To demo the importance of budgeting as a tool for planning and controlling in operations of a fabrication industry which has maximization of net income as its chief nonsubjective. 2. To identity the processs adopted in the preparation and execution of one-year budget in ANAMMCO Ltd. Emene. 3. To find whether there is a correlativity between the type of budget implemented and their existent public presentation 4. The survey will find whether or non budgetary control as a direction tool contributes to the betterment of managerial efficiency and high productiveness.
1. 5 SIGNIFICANCE OF THE STUDY
In the concern universe. the chief aim is to maximise net income by supplying goods and services at just. competitory. and low-cost monetary value. No direction worth its name cab ignore net income maximization. unless it will stifled out
of concern. Hence this survey is important with the undermentioned grounds. 1. The survey will find whether budgeting as a tool for planning and
control plays any important function towards guaranting profitableness and efficient rendition of goods and services. 2. Determine the functions played by the direction in budgeting and whether they guarantee attachment to the budget. 3. Determine the functions of budget as a tool for effectual and efficient use of scarce resources. 4. The survey will assist future research workers on budgeting and budgetary control with accent on fabrication industry.
1. 6 Scope and restriction
The survey of budgeting as a tool for planning and control in a fabrication industry is focused on Anambra Motor Manufacturing Company Ltd. Emene. In transporting out the research work. the author faced some jobs. Among the major jobs is the fright of occupation security by the Staff of the company who felt that their place in the company might be insecure. if they grant interview without blessing from the direction. Again. financess available to the research worker were deficient to cover the cost of conveyance in carry oning the research. and cost of publishing the questionnaire distribution and aggregation of questionnaire to and fro the respondents. These jobs were good moderately taken attention of.
1. 7 definitation of footings
The Institute of Cost and Management Accounts defined budgets as “a manual quantified in pecuniary footings. prepared and approved prior to a defined period normally demoing planned income to be generated and or outgo to be incurred during that period and the capital to be employed to achieve those aims. Budgetary control:
This is the constitution of budgets associating to the duties of top direction to the demand of a policy and the uninterrupted comparing of existent budgeted consequences. either to. by single action. the aim of that policy or to supply a footing for alteration Discrepancy:
This is the difference between planned budgets and existent consequences. Favorable discrepancy:
This is the surplus of the budgeted consequence over the existent consequence in instance of costs. but in instance of gross. it is the surplus of existent consequence over the budgeted consequence. Organization:
All constitutions whether authorities of in private owned.
1. 8 background of ANAMMACO LIMITED. EMENE
ANAMMACO LTD is a joint venture between the Federal Military Government of Nigeria and Daimler Benz Ag. of West Germany. The per centum of ownership of the Federal Military Government is 60 % while that of the Daimler Benz Ag. of West Germany is 40 % . The company was incorporated as a limited liability company in January 17. 1977. The foundation rock was laid by the so Military Governor of Anambra State John Atom Kpera. May 12 1973. The official commissioning of the works was done by the President of the Federal Republic of Nigeria. Shehu Shhagari on July 3 1980. The official commissioning of ANAMMCO developing Centre was done Honourable Federal Minister of Education ; Sylvetser Ugwu. on April 26. 1982. Official gap of ANAMMCO Centre trim portion section was so Federal Minister for industry on October 5. 1982. The company commenced official production in January 1981. The installing production capacity in one displacement
per annum in seven 1000. five hundred ( 7500 ) . The N60 million works. which is situated. sued on 300. 00 square meters site at Emene near Enugu and was built under joint partnership understanding between the Federal Government of Nigeria and Daimler-Benz Ag of West Germany to bring forth Mercedes Benz Trucks to run into Nigeria’s increasing demand for commercial vehicles. ANAMMCO is hence. a logical development of the long pioneering trading from of Mercedes Benz gross revenues and services throughout Nigeria. ANAMMCO now brings Mercedes Benz Technology and knowledge now into Nigeria. piece at the same clip making over 1. 300 employment chances ; for Nigerians all of whom are being trained and assisted by a term of abroad experts and technicians.
T. Lucey. Management Accounting: London D. P Publication Ltd. 1985. Pg. 75 P. E. Drunker. The Practise of Management. London Heinemann Publishing Co. Ltd 1963 Pg. 63 C. J. Walker. Principles of Cost Accounting. London Mac Donald
and Evans Ltd. 1976. Pg. 118
Review of related literatures
All organisation. whether economic. societal and political etc. do programs for the hereafter. an organisation without a program is no longer an organisation. but an uncoordinated association of persons. Plans nevertheless. can change greatly in their grade of edification and the extent to which different organisation program their hereafter may reflect to the extent to which and organisation can find its success by holding a elaborate planning. This is opposed to being at the caprice of volatile economic and societal forces and therefore trusting on an ability to feel what is required. The value of budgeting to all organisations irrespective of size is by and large recognized that it is widely practiced by different organisations. This is as a consequence of uncertainness with which their activities are carried on. hence. the importance of the functions played by budgeting in such state of affairss. All organisation have limited resources and these limited resources impose limited on the figure and scope of ends that the organisation can trust to achieve. Common organisational end include maximising net income of accomplishing continual growing or guaranting the endurance of the organisation. avoiding hazard in doing investing. and executing or societal services desired by others. It is with a position of accomplishing their organisation ends that great accent is placed on budgeting.
Budgeting is basically a procedure planning and control. A well-prepared budget provides direction with a planned programme based upon probe. survey and research on the portion of the full organisation. A budget. hence. function to convey together the separate program of different sections in an organisation and supply the agencies of organizing the selling. production and fiscal of the organisation. Definition of budgeting
Harmonizing to Lucey. a budget can be defined as a quantitative look of a program of action prepared in progress of the period to which it relates.
Budget may be prepared for the concern as a whole. for section. for maps such as gross revenues and production of for fiscal and resource points such as hard currency. capital outgo. work force and purchase. M. O. Peter sees budget as a fiscal and / or
quantitative statement prepared prior to a defined period of clip of the policy to be pursued for the intent of achieving a given aim.
Charles T. H. described budget as the look of a program of action and an assistance for coordination and execution. Budget may be formulated for the organisation as a whole of for any acme. I. M. Pandey farther stated that a budget is a comprehensive and co-ordinated program. expressed in fiscal term. for the operations and resources of an endeavor for some specific period in the hereafter. Besides a budget is the program of the firm’s outlook in the hereafter. Mayo Association describe budget as “a program quantified in pecuniary footings. prepared and approved prior to a defined period of clip. normally demoing be aftering income to be generated and/or outgo to be incurred during that period and the capital to be employed to achieve a given aim. Harmonizing to T. Lucey. a budget has a figure of benefits. viz. : a. Regular. systematic monitoring and coverage of activities help the control of current operations. B. It provides clear guidelines for directors and supervisor and is the major manner in which organisation aims are translated into specific undertakings and aims related to single directors. c. The budgetary procedure is an of import method communicating and coordination both vertically and horizontally. d. The integrating of budget makes possible better hard currency and working capital direction from the above remarks. it could be seen that a budget is a quantitative province of programs in a future period. The procedure of readying is known as budgeting. which therefore the planning and controlling of the cost of a organisation. 2. 2features of budgets
Budgeting is a program of action. prepared by all organisation. the big medium graduated table concern have a comprehensive system of budget prepared in a formal may. However. some medium and little houses do non hold a comprehensive system of budgeting because the programs for the operation the concern may be at the discretion of the pull offing manager. A comprehensive budgeting system
consist of the readying of a maestro budget with a complete bundle of the constituent. budgets consist of three chief types. runing budgets. fiscal budgets and capital budgets. Operation budgets:
This sort of budgets express the consequences of the firm’s operation during the budget period. Operation budget contain outlooks of “WHEN” and “HOW MUCH” with regard to such thing as grosss. disbursals and net income. Operating budget is a tool that facilitates planning and commanding. Planing involves placing and nonsubjective and finding the measure for accomplishing these aims. On the other manus control device in order to be effectual must take awareness of the organisational construction of the organisation. Financial budgeting
Fiscal budgets focuses on the impact of hard currency operations and other factors. such as be aftering capital spendings for equipment. The most of import constituent of fiscal budget is hard currency budget. The major aim of hard currency budget is to be after in such a manner that the company ever maintain sufficient hard currency balance to run into its demands and uses the idle hard currency
in the most profitable mode. The readying of the hard currency budget compels direction to look in front and equilibrate its policies activities and operation. Capital budget
Capital budget harmonizing to I. M. Pandey involves the planning to get worth. while undertakings together with the timings of the estimated cost and hard currency flows of each undertaking. such undertaking require big amount of financess and have long-run deduction for the house. The capital budget are by and large prepared individually from the operating budget. In many companies. these is a commission separate from the budget commission to allow financess for capital investing undertaking. In the capital budgeting the profitableness of each undertaking has to be carefully evaluated.
2. 3Preparation of budget:
Budgets are prepared based on programs taking into consideration external influences such as rivals activities. market portion. technological. economic and political alterations. The one-year budgeting procedure in most concern is of import for many grounds and serves two major intents. I the
readying. an accounting point of position. the processs are planned in such a manner that the terminal consequence of the recording and summarizing of operations in a set of fiscal statement are indistinguishable in format with those consequence from the procedure of entering historical cost. The difference estimates what will go on in the hereafter instead so what has happen in the yesteryear.
The readying of budget requires the joint attempt of all executives involved in the scene of ends and inventing the policies and triping the processs necessary to implement the ends. The processs for preparation of a budget varies between organisation. Each responsible persons. from the lowest degree may explicate his ain budget and submit it through the following higher individual. for incorporation into a entire or maestro budget. Master budget may be formulated by the comptroller or another executive and passed downwards for remarks at all degrees.
A compressive budgetary system constitutes chiefly undermentioned: * Gross saless budget
* Production budget
* Cash budget
* Purchase budget
* Pro-forma statement
* Capital outgo budget
The gross revenues budget
Sale budget is the usual starting point for budgeting intents. The gross revenues budget is important in that it is an estimation of the gross to be generated by the company from its operation. It every bit good focuses on how much is done within the company. it besides serves as a tool for innovation direction without the gross revenues budget the building of the other budget would be impossible. Production budget
The production budget is geared to the gross revenues budget and the company’s stock list policy. The production budget is first developed in units. The chief aim of the production budget is to organize in footings of clip and measure. the production of goods and their gross revenues. The expression for finding the measure to be produced id found by “Estimated gross revenues as
shown in gross revenues budget. plus coveted stocks at terminal of the period. equal entire unit of merchandise required. less stock of merchandises at the start of the period. equal to the entire production units for the period. Physical units of finished production are the footing of saying the production budget. Buying budget:
The purchase of
direct stuffs is section on the degree of get downing stock list and stock list. The units of stuff to be purchased is determined therefore. budgeted usage PLUS desired stoping stock list ( Materials ) LESS get downing stock list ( Material ) EQUALS purchases in units. Cash budget:
Cash budget represent the hard currency grosss and payments and the estimated hard currency balance for each month of the budget period. The aim of the hard currency budget includes: I. To find the available beginnings and sums of capital that can be acquired. two. To supply direction with the estimations of the company short-run and long-run demands of capital three. To organize the company’s fiscal planning with its operation programs. Direct labour budget:
This budget is an estimation of the direct cost because indirect costs are included in the fabrication overhead cost budget. The direct labour hr to be spent in production is a map of the units to be produced and labour hours required to bring forth one unit. Pro-forma income statement:
Organizations fixing comprehensive budget normally compare budget income statement and budgeted balance sheet. These budget fiscal statement are besides called the pro-forma fiscal statements. The pro-forma income statements are prepared in some mode as the existent income statement. except that the figure represents intended instead than the accomplishment. Pro-forma balance sheet:
The budget balance sheet is prepared from the operation budget and the fiscal budgets. that is from the gross revenues budget. production budget. buying budgets. direct labor and the hard currency budget. Master budget:
The maestro budget is a comprehensive budget which expresses the overall concern program for the whole organisation for a period covering one twelvemonth or less. The maestro budget is a co-ordinated instrument and a sum-up of all the fiscal budgets of a company. integrating the gross revenues. production. operation disbursals and fiscal budget. It represents and presents the consolidation of all the back uping budgets and represents the fiscal consequence on the entire program of the concern. The maestro budget covers a wider range. Master budget is really a combination of the budgeted income statement and balance sheet and when supported by the subordinate budgets. it is presented to the board of manager for blessing. On blessing. it becomes the fiscal sum-up of the in agreement period. normally a twelvemonth.
Normally. the maestro budget is prepared by the budget direct manager or fiscal accountant. The pro-forma income statement is regarded by many writer as the maestro budget. An illustration of comprehensive maestro budget as given by CHARLES T. HORNGREM as shown below.
Appraisal of fixed and flexible budgets
By and large. there must be an avenue for accomplishing and terminal and these avenue relate to the signifiers. procedures and methods involved. Planing and control activities of concern and organisation are achieved through the readying of assorted signifiers of budgets by which planning and control are effected. The two most widely used type of budgets are: fixed and flexible budget. However. in some instances. some organisation usage another types of budgeting called uninterrupted budgeting.
T. Lucey defined a fixed budget as one which is designed to stay unchanged. irrespective of the degree
of end product or turnover attained. The fixed budget is a individual budget with no commissariats for accommodation should existent activity turn out to be different from planned. As many concerns can non foretell accurately their hereafter activities as a consequence of fluctuations in their manner of operations. the fixed budget is of small importance to direction. If there is a important difference between existent degree of activity for intent of public presentation rating. such state of affairs demands that a public presentation study to prepared after the facts show
what grosss and cost have been at the degree of activity.
A flexible budget. on the other manus estimations cost at several degrees of activity. Flexible budgeting assumes that cost of labor. stuffs and installations used in production vary in conformity with alterations in volume of activities. The flexible budgeting system provides for seting the budgeted grosss and cost for the existent degree of activity experienced in the budget period. Flexible budget acknowledge the different behavioral forms of cost in relation to assorted end product degrees. Flexible budgeting is by and large utile because the specific budget period. assists the direction to take a degree or degrees of activities for the planning periods. They are peculiarly utile for comparing and control intent with the existent end product achieved.
It would be notable to province that a company with a steady production degree. but seasonal unsure gross revenues might handily run a flexible budget of gross revenues and a fixed budget for production. The other type of budget reference antecedently which is known as a uninterrupted budget besides called turn overing budget can be described as one which entails the uninterrupted updating of a short –term budget by adding. state a future month or one-fourth and subtracting the earliest month or one-fourth in order to do the budget reflect current conditions. This type of budget provides for alteration of budgeted informations based on current periods and it is chiefly used for hard currency budgets.
In decision. it could be seen in a nutshell that a type of budget could be used by an organisation or a combination of all the different types could be used in order to heighten effectivity and efficiency in its operation.
2. 3planning map in an organisation
Planing by and large recognized as a direction map. Harmonizing to Fayol. “To manage is to calculate and be after. to form. to command. to organize and to command. Koontz besides said. “Managing is an operational procedure ab initio best described by analysing the managerial maps. The five indispensable direction maps are: Planning. Forming. Staffing. Directing. Leading and Controlling. It is clear that be aftering classified as
one of the maps of direction. Operationss such as selling. fabrication. accounting technology and buying may differ from one endeavor to another but the direction map are common to all. The act of planning can be said to be futuristic it is done to make up one's mind in progress what is to be done and to what terminal. who will make what at a certain clip and how it will be accomplished. Planning is done for the full organisation
and specific functional countries like ; finance. selling and production.
Lucey in his position described planning as. “the preparation. rating and choice of schemes in voting a reappraisal of the aims of an organisation. the operating environment and menaces for the intent of fixing a long-run strategic method of achieving set objective” . Hence. when a director negotiations of corporate planning. he is mentioning to a comprehensive concern procedure which involves many types of planning activities. Drucker ascertained that “Corporate planning includes the scene of aims. forming the work. people and system to enable those aims to be attained. actuating through planning procedure and determination devising. From the definitions of corporate planning highlighted above. certain things are likely to be clear about the construct. These are: 1. It is futuristic nexus between present and future.
2. It ensures that corporate planning must be comprehensive. 3. It ensures that organisations know it exists and its chief aims and ends are known. 4. It ensures that the organisations knows its ain strengths and failings. chances and menaces posed by its environment. The definitions by Lucy and Drucker are all encompassing because they view corporate planning as a complete direction procedure which involves more than merely doing programs.
2. 4controlling map in an organisation
Planing and commanding are basic parts of the direction procedure. Managers device hereafter classs of actions through planning. but even the most carefully prepared program is no warrant of success. Therefore directors needs to do definite measure or moves to maintain things in the right way. This is the map of control to complement planning by presenting disciplinary
actions as programs are being implemented. Fayol. in his position. described control as dwelling of verifying whether activities occur in conformance with the programs adopted. instructions issued and rules established. It has the intent of indicating out failings and mistakes so as to forestall reoccurrence. From the above definition. control is described to be closely tied to be aftering at one terminal of the procedure and besides to directing at the other terminal. control is really much related with other direction map e. g. planning. forming and directing and it follows that if the other maps were performed good. there would be small demand for controls. However. in most operations. there exists divergences. misdirection and mistake doing it necessary for the trough to use disciplinary steps. As a direction map. Koontz et al defined control as “The ordinance of work activities in conformity with preset programs so as to guarantee the achievement of the organization’s objectives” . Control of operation s through established criterions. compares existent public presentation to these criterions and right divergences from the criterions. The above definition is encompassing because it presumes that there are criterions by which public presentation is checked. It besides show that control is made definite stairss which must be applied irrespective of the activity being managed. Harmonizing to Lucey. “the intent of control is to assist in guaranting that the operations are public presentation of the organisation conform to plan” . Stairss involved in control
Harmonizing to lapidator. “After criterions have been set there are so three elements or
stairss in the procedure of control. They are: 1. Measuring the public presentation
2. Comparing public presentation with the criterion and determining if differences occur 3. Correcting unfavorable divergences by agencies of remedial action. 1. Measuring public presentation
Once criterions of public presentation are established. the following stage of the control map is the direction of public presentation that has been achieved. The criterions of public presentation demand to be varied and clearly stated. Where criterions are qualitative instead than quantitative. it is preferred for them to be expressed in footings of terminal consequence instead than of methods it is the constitution of certain minimal acceptable degrees which serves to specify the uneffective public presentation. Below these degrees the divergence is considered
inordinate and unacceptable. Measurement of public presentation against criterions is frequently a hard undertaking and Koontz pointed out that measuring of public presentation against criterion is non ever operable and it should ideally be on future footing and anticipated so that divergences may be detected in progress of their existent happening and avoided by puting of appropriate disciplinary steps. 2. Comparing public presentation with the criterions
Comparism focuses on finding the sum of dissension between set criterions and existent consequences. In some activities. divergences from set criterions may be allowed while in other instances. a little divergence may be serious. When comparing public presentations. the manager’s attending should be directed to the exclusions because it is merely when important discrepancies occur that control is called for. 3. Correcting divergences
The concluding component in the control procedure. is that of taking disciplinary actions. by rectifying divergences. director is assured the consequence are being kept in understanding with set program. When unacceptable divergences are noticed. immediate disciplinary action should be administered as effectual control does non digest unneeded holds. Brining the divergences to the notice of the direction comes under the construct of feedback which is information about the consequences of actions passed back to the individual in charge so that the necessary alteration may be made.
The director may take different disciplinary action such as ; redrawing his programs or by modifying his end. re-assignment of responsibilities. extra staffing or re-staffing. better choice and preparation of subordinating and through better directing. The chief rectification method is to place the cause of the trouble in accomplishing the proposed criterions and taking disciplinary action.
2. 7budgetary control
With mention to be aftering. control and determination devising associated with operating system and relevant information is provided by budgetary control system. The chief intent or aim of budgeting and budgetary control system is the processing of input and end product informations associating to physical runing units in order to bring forth information that will help direction
to command these operation units.
A budget may be defined as a program quantified in pecuniary footings. prepared and approved prior to a define period of clip. It normally shows planned income to be generated and outgo to be incurred during that period and besides capital to be employed to achieve a given aim. Budgeting and control is defined by the constitution of budgets. associating the duties of executives to the demand of policy and the uninterrupted
comparizim of existent and budgeted consequences. This could be done to procure the aim of the policy or to supply a footing for alteration.
2. 8analysis of discrepancy
The sum of any discrepancy is the cost difference between the criterion and the existent public presentation. Variance highlight those state of affairss where existent consequences are non as planned. whether better or worse. They represent the difference between budgeted and existent public presentation of each component of cost and sometimes grosss. Hence. they could be referred to guideposts which alert direction to the divergences between existent and standard public presentation and faster probe into the causes of the difference. In a instance when existent consequences are better than expected. a favorable discrepancy occurs. The analysis of discrepancy enable direction to concentrate on of import points and to nail duties. This would assist direction to happen out where the mistakes come from when consequences are hapless.
Entire sum of discrepancy for any input tacto is calculated as follows: 1. Entire discrepancy = Price discrepancy + Usage discrepancy
Entire discrepancy is subdivided into monetary value and usage discrepancy
I. Price discrepancy = ( Standard monetary value – Actual monetary value ) multiplied by Actual Quantity two. Use discrepancy = ( Standard Quantity – Actual Quantity ) multiplied by Standard Price.
A. Material Discrepancy
=Standard Cost-Actual Cost
=N1. 00?100-N1. 50?1. 100
1. Monetary value Discrepancy
=Standard Cost-Actual Costx Standard Price
2. 9additional tool for budgeting and budgetary control: zero-base budgeting ( ZBB ) This institute of Cost and Management Accountant defined Zero-Base Budgeting as “A method of budgeting whereby all activities are revalued each clip a budget is formulated. Each functional budget start with the premise that the map does non be and it is Zero-Cost. Increases of cost are compared with increases of benefit for a given budgeted cost. It is cost benefit attack whereby it is assumed that the cost allowance for an point is zero. and will stay so until the manager’s responsible justifies the being on the cost point and profit the outgo brings. utilizing this method. a quizzical attitude is developed whereby each cost point and its degree has to be justified in relation to the manner it helps to run into aims and how the outgo benefits the organisation.
Zero-Base budget can be applied in both net income seeking and non-profit seeking organisations. This technique of budgeting was introduced in the beginning of the early 1970’s in United States of America ( U. S. A ) and it is aimed at cut downing the cost and abuse of fund in authorities and authorities sections.
Zero-Base Budgeting provides a entire attack to budgeting by get downing from the beginning to measure each map or activity. so to analyze and contrast any options. Therefore. every point of budget outgo must be examined critically and justified it is allowed to organize portion of the budget.
Research design and methodological analysis
4. 1 beginnings of day of the month
In order to garner necessary information needed for this research survey. we
made usage of two beginnings from which the informations were sourced.
4. 2. 1 Primary Beginnings
We obtained information from Anambra Motor Manufacturing Company. Enugu. Questionnaire
were distributed to middle and senior staff members of the company. The research besides unwritten interview for some qualified staff members of the company on a random footing.
4. 2. 2 Secondary Beginnings
We used available secondary beginnings of informations. These include text editions. magazines. diaries. studies etc. the libraries consulted include those of the University of Ado-Ekiti. University of Lagos and the ANAMMCO library.
4. 2 interview inquiry
The interview inquiries were framed and administer to the concerned respondents. Some of the inquiries were open-ended while others were closed-ended. The inquiries asked in the unwritten interview were structured in a mode that exposed the being. extent and importance of budgeting as a tool for planning and control in the company. A transcript of the questionnaire is contained in the appendix.
4. 3 sampling and sample size
In this chapter. the informations collected from the respondents in Anambra motor fabricating company Ltd. sing the basic issue involved in the research all presented and analyzed. A sum of 31 questionnaire were distributed to assorted sections in ANAMMCO Ltd. The information collected during the research will be presented and analyzed in the subsequent chapter.
4. 4 method of informations analysis
In the analysis of the informations collected. statistical methods were used for the questionnaire and the hypothesis.
4. 1. 1 Analysis of questionnaires:
In analysis the questionnaire. the per centum method of analysing was used. It is found by A % =XN?100
Ten represent figure of responses to one option of each point in the questionnaire. N represent the entire figure of questionnaire distributed or the population. A % represents the per centum of responses to the option to the entire population.
3. 1. 2 Analysis of Hypothesis
The testing of the hypothesis will affect the usage of Chi-square. which will be found by
X2= ( 0-E ) 2/E
O represents the ascertained frequence
Tocopherol represents the expected or theoretical frequence
X2 represents the Chi-square.
Presentation. analysis and reading of informations
In analysing and construing the information collected. the research worker made the of questionnaire administered. It should be noted from the on set that primary informations for the research was obtained from respondents reactions and responses to the questionnaire administered on them. the analysis of the questionnaire was carried out utilizing the simple per centum method. 5. 1 analysis of questionnaire
Question 1: Department of energies your company employ planning and control in accomplishing it nonsubjective? Table 1
ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 31| 100|
NO| -| -|
TOTAL | 31| 100|
From the tabular array. the respondents stated that the company employs be aftering and control in achieve in it’s aims based on this. it is apparent that ANAMMCO LTD employs planning and control in accomplishing its aim.
Question 2: Do you experience that the application of Budgeting as a tool for
planning and control has given your organisation a competitory border? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 26| 84|
NO| 5| 16|
TOTAL | 31| 100|
The above tabular array can be interpreted as 26 respondent stand foring 84 % of the respondents agreed that the application of budgeting as a tool for planning and control has given their organisation a competitory border. while 5 answering represent 16 % were of the sentiment that the application of budgeting
as a tool for planning and control has non given their organisation a competitory border.
Question 3: Does the usage of budgeting as a tool for planning and command assist your company to accomplish efficiency in it operation? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 31| 100|
NO| -| -|
TOTAL | 31| 100|
The tabular array shows that 27 respondents stand foring 87 % stated that the usage budgeting as a tool for planning and control helped the company to accomplish expeditiously in its operation while 5 stand foring 13 % well of the contrary position.
Question 4: In what specific ways has the usage of budgeting as a tool for be aftering control helped the company. ALTERNATIVE| RESPONSE| PERCENTAGE % |
Cost Reduction | 5| 16|
Better pricing policy | 3| 10|
Net income planning | 5| 16|
All of the above | 18| 58|
TOTAL | 31| 100|
From the above. we can detect that 5 respondents stand foring 16 % stand foring cost decrease and net income planning has help in that visible radiation while 3 stand foring 10 % say that budget has help the ANAMMCO LTD in better pricing policy. Finally. 18 respondent stand foring 58 % were of the sentiment
that budgeting the above ( cost decrease. better pricing policy. and net income planning ) . Question 5: Is determination doing performed in your planning and control? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 25| 81|
NO| 6| 19|
TOTAL | 31| 100|
From the tabular array 25 respondent stand foring 81 % were of the sentiment that determination devising is performed with budgeting as a tool for planning and control while budgeting as a tool for planning and control while 6 respondent stand foring 19 % was of a contrary position.
Question 6: Make you meet jobs is execution of the company’s determination? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 27| 87|
NO| 4| 13|
TOTAL | 31| 100|
From the above we can detect 27 respondents stand foring 87 % stated that the organisation brush jobs on while 4 respondents stand foring 13 % held a contrary position.
Question 7: What are at that place jobs?
ALTERNATIVE| RESPONSE| PERCENTAGE % |
Problem of guaranting the engagement of directors | 2| 7|
Lack of proper apprehension of system by managers| 5| 16| Directors prosecuting their persons ends alternatively of corporate ends | -| -| Others ( stipulate ) uncertainty| 24| 77|
TOTAL | 31| 100|
The above tabular array shows that 2 or 7 % the respondents were of the sentiment that it is the job of guaranting the investing of directors while 5 or 6 % of the respondents stated that the job is deficiency of proper apprehension of the system by directors. Again 24 or 77 % of the respondent stated that the job is that of uncertainness that arises in concern.
Question 8: How do you believe these jobs can work out?
ALTERNATIVE| RESPONSE| PERCENTAGE % |
By implementing the budget good | 18| 58|
Greater engagement of directors | 5| 16|
To foreground addition of working in line with budget| 8| 26| TOTAL | 31| 100|
The tabular array shows that 18 or 58 % of the respondents stated that the job could be solved by implementing the budget really good. While 5 or 16
% of the respondents stated the job could be solved by sing greater engagement of directors. However. 8 or 26 % of the jobs could be solved by foregrounding addition of working in line with the budget.
Question 9: Department of energies existent public presentation normally deviate from the budgeted degree of public presentation? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 6| 19|
NO| 25| 81|
TOTAL | 31| 100|
From the above tabular array. 6 or 19 % of the respondent were of the sentiment that existent public presentation normally deviate from the budgeted degree of public presentation while 25 of 81 % of the respondents were of the sentiment that existent public presentation do non normally deviate from the budgeted degree of public presentation. but on occasion.
Question 10: Bash you agree that public presentation of your company depend on the effectual execution of budgeting controls? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 26| 84|
NO| 5| 16|
TOTAL | 31| 100|
The tabular array above shows that 26 or 84 % of the respondents stated. That the public presentation of the company depends on the effectual execution of the budgetary control while 5 or 16 % of the respondent well of a contrary position.
Question 11: Are the departmental directors allowed to exert uninterrupted control over their departmental budgets? ALTERNATIVE| RESPONSE| PERCENTAGE % |
Yes. but with some step of control | 20| 65|
Yes | 5| 16|
No | 6| 19|
TOTAL | 31| 100|
From the Above tabular array. we can observed that 20 or 65 % of the respondents stated that directors are allowed to exert uninterrupted control from top direction. While 5 or 16 % of the respondents maintained that directors exercise uninterrupted control over departmental budgets. Question 12: Is use of resources achieved with budgeting as a tool for planning and control? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 24| 77|
NO| 7| 23|
TOTAL | 31| 100|
From the above. we observed that 24 or 77 % of the respondents will of the sentiment that use of resources can be achieved with budgeting as a tool for planning and control while 7 or 23 % of respondents were of the contrary sentiment.
Question 13: How would you rate that budgetary system that your organisation operates? ALTERNATIVE| RESPONSE| PERCENTAGE % |
A really good one | 27| 87|
Averagely good | 2| 7|
Not so good | 1| 3|
Indifferent | 1| 3|
TOTAL | 31| 100|
The above tabular array shows that 27 or 87 % of the respondent were of the sentiment that the budgetary system operate by the organisation is a really good one while 2 or 7 % of the respondent stated that the budgetary system is averagely good. Again 1 or 35 % of the respondent were of sentiment that the budgetary system were non good and apathetic.
Question 14: Would you advice other organisation to do proper usage of budgeting as a tool for planning and control? ALTERNATIVE| RESPONSE| PERCENTAGE % |
YES| 29| 94|
NO| 2| 6|
TOTAL | 31| 100|
From the above tabular array 29 or 94 % of the respondents were of the sentiment that will advice other organisation to do proper usage of budgeting as a tool for planning and control while 2 or 6 %
were of the contrary sentiment.
5. 2 hypothesis proving
In this subdivision. were are traveling to prove the hypothesis formulated earlier in this research work. The testing of hypothesis is carried out so as to a enable the research worker to organize an sentiment and to pull illations from the trial such that the proven informations is accepted while the other is rejected. Hypothesis 1
Null Hypothesis. H0: - Director do non the budgeting in planning and control in achieving the ends of the concern. ALTERNATIVE HYPOTHESIS H1: Manager use budgeting in planning and control in achieving the end of the concern. To prove this hypothesis we shall use the responses to oppugn 2 and 3
% | FAVOURABLE| UNFAVOURABLE| TOTAL|
Make you take that the application of budgeting as a tool for planning and control has given your organisation a competitory border? | 26 ( 27 ) | 5 ( 2 ) | 3131| Does the usage of budgeting as a tool for planning and command assist your organisation to accomplish efficiency in its operations | 2727| 4 ( 5 ) | | TOTAL | 53| 9| 62|
Note: - Favorable indicate that answer that are non in support of void hypothesis ( you answer ) unfavorable indicate reply that are in support of void hypothesis ( No reply ) . The figures that are non in parenthesis are the ascertained frequences ( 01 ) while the figures in parenthesis are the expected frequences ( e1 ) the expected frequences are computed therefore: 31?5362= 164362=27
31?962= 27962=4. 5=5
Calculation of grade of freedom ? . degree Fahrenheit
? . f=r-1 ( c-1 )
Where R is figure of rows =2
degree Celsius is the figure of column =2
therefore ? . f= ( 2-1 ) ( 2-1 ) =1
=0. 0370+0+0+0. 2
= 0. 2730
01= Observed Frequencies
e1= Expected frequences
At 5 % percent degree of significance and 1 grade of freedom. the critical value X2=3. 841 ( from chi-square tabular array ) hence 0. 2730 & lt ; 3. 841 determination: Since the computed chi-square value of ( 0. 2730 ) i. vitamin E less than the critical value x2 ( 3. 841 ) . we therefore accept H1 and concluded that troughs and us budgeting planning and control in achieving the prod of the concern. Hypothesis 2:
NULL HYPOTHESIS H0: Decision devising is performed in fabrication industry without utilizing budgeting as a tool for planning and control. Alternate Hypothesis. H1: Decision devising is performed in a fabrication industry utilizing budgeting as a tool for planning and control.
To prove this hypothesis. we shall use the response to inquiry 5 and 6. Question 5 AND 6| FAVOURABLE| UNFAVOURABLE| TOTAL|
Is determination doing performed in your company with budgeting as a tool for planning and control | 25 ( 26 ) | 6 ( 5 ) | 3131| Do you meet job in execution the company’s determination | 27 ( 26 ) | 4 ( 5 ) | | Total | 52| 10| 62|
Note: Favorable indicate reply that are non in support of void hypothesis ( Yes reply ) . Unfavorable indicates replies that are in support of void hypothesis ( No reply ) .
The figures that
are non in parenthesis are the ascertained frequences ( 01 ) which the figures in parenthesis are the expectd frequences ( e1 ) calculation of grade of freedom ? . f. ? . f=r-1c-1
R is t he figure of rows = 2
degree Celsius is the figure of column = 2
therefore ? . f=2-12-1=1
X2 ( 01-e1 ) 2e1
Where x2=chi square
X2 31*5262=26. 31*1062=5
X2= ( 25-26 ) 226+ ( 27-28 ) 226+ ( 6-5 ) 25+ ( 4-5 ) 25
=0. 0385+0. 0385+0. 1667+0. 1667
At 5 percent degree of significance and 1 grade of freedom. the critical value x2 = 3. 841 ( from chi-square tabular array ) . Therefore 0. 4104 & lt ; 3. 841
Decision: since the compound chi-square
Value 0. 4104 is less than the critical and conclude that determination devising performed in fabrication industry utilizing budgeting as a tool for planning and control. Hypothesis
NULL HYPOTHESIS H0: Use of resources is non achieved with usage of budgeting and budgetary controls. Alternate hypothesis H1: Use of resources is achieved with usage of budgeting and budgetary control.
To prove this hypothesis we shall use the responses to oppugn 11 and 12. Question 11 AND 12| FAVOURABLE| UNFAVOURABLE| TOTAL|
Make you hold that public presentation of company depends on the effectual execution of budgeting control | 26 ( 25 ) | 5 ( 6 ) | 3131| In use of resources achieved with budgeting as a tool for planning and control| 24 ( 25 ) | 7 ( 6 ) | 31| Total | 52| 12| 62|
Note: favorable indicates answer that are non in support of void hypothesis ( Yes reply ) unfavorable indicates answer that are in support of the void hypothesis ( No reply ) . The figures that are no parenthesis are the ascertained frequences ( 01 ) while figure in parenthesis are the frequences ( e1 ) . e1=31?5062= 155062=25
Calculation of grade of freedom ( ? . degree Fahrenheit )
? . f=r-1c-1
R is figure of rows =2
degree Celsius is figure of column =2
? . f=2-12-1=1
X2 ( 01-e1 ) 2e1
Where x2=chi square
X2= ( 26-25 ) 226+ ( 24-25 ) 226+ ( 5-6 ) 26+ ( 7-6 ) 26
=0. 04+0. 04+0. 1667+0. 1667
At 5 % percent degree of significance and 1 grade of freedom. the critical value X2=3. 841 ( From chi-square tabular array )
Therefore 0. 4134 & lt ; 3. 841
Decision: Since the compound qi square
Value of ( 0. 4134 ) is less than the critical value X23. 841. we therefore conclude and accept H1 that use of resources is achieved with the usage of budgeting and budgetary controls.
Summary of findings. recommendation and decision
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