Commerce Scriptures

  Budgetary Control   • Meaning  • Objectives  • Advantages  • Disadvantages • Meaning of Budgetary control     Budgetary control  is the process by which budgets are prepared for the future period and are compared with the actual performance for finding out variances, if any. The comparison of budgeted figures with actual figures will help the management to find out variances and take corrective actions without any delay. Objectives of Budgetary Control The  main objectives of budgetary control  are given below: Defining the objectives of the enterprise. Providing plans for achieving the objectives so defined. Coordinating the activities of various departments. Operating various departments and cost centres economically and efficiently. Increasing the profitability by eliminating waste. Centralizing the control system. Correcting variances from sit standards. Fixing the responsibility of various individuals in the enterprise. Adva...

  Types of Budgets Some of types of Budgets are:  (i) Sales Budget  (ii) Production budget  (iii) Financial budget  (iv) Overheads budget  (v) Personnel budget and  (vi) Master budget (i) Sales Budget: A sales budget is an estimate of expected total sales revenue and selling expenses of the firm. It is known as a nerve centre or backbone of the enterprise. It is the starting point on which other budgets are also based. It is a forecasting of sales for the period both in quantity and value. It shows what product will be sold, in what quantities, and at what prices. The forecast not only relates to the total volume of sales but also its break-up product wise and area wise. The responsibility for preparing sales budget lies with the sales manager who takes into account several factors for making the sales budget. Some of these factors  are: (i) Past sales figures and trend ; (ii) Estimates and reports by salesmen ; (iii) General economic cond...

  Cost Management - Explanation • Meaning Cost Management Cost management is the process of estimating, allocating, and controlling project costs. The cost management process allows a business to predict future expenses to reduce the chances of budget overrun. Projected costs are calculated during the planning phase of a project and must be approved before work begins.  As the project plan is executed, expenses are documented and tracked, so things stay within the cost management plan. Once the project is completed, predicted costs and actual costs are compared, providing benchmarks for future cost management plans and project budgets. Importance of Cost Management  i n project management Cost project management is vital to an organization’s project planning process. Global services company Accenture believes sustainable cost management should be “part of the company’s DNA.”  Without a detailed budget, you cannot effectively map out the resou...

  Cost Accounting (Meaning, Objectives and Principles) • Meaning:    Cost accounting is the classifying, recording and appropriate allocation of expenditure for the determination of the costs of products or services, and for the presentation of suitably arranged data for purposes of control and guidance of management. It includes the ascertainment of the cost of every order, job, contract, process, service or unit as may be appropriate. It deals with the cost of production, selling and distribution.    It is thus the provision of such analysis and classification of expenditure as will enable the total cost of any particular unit of production or service to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how such total cost is constituted (i.e. the value of material used, the amount of labour and other expenses incurred) so as to control and reduce its cost.    According to Wheldon, “Cost accounting is the...

Cost of Production Cost of production refers to the total cost incurred by a business to produce a specific quantity of a product or offer a service. Production costs may include things such as labor, raw materials, or consumable supplies. In economics, the cost of production is defined as the expenditures incurred to obtain the factors of production such as labor, land, and capital, that are needed in the production process of a product. For example, the production costs for a motor vehicle tire may include expenses such as rubber, labor needed to produce the product, and various manufacturing supplies. In the service industry, the costs of production may entail the material costs of delivering the service, as well as the labor costs paid to employees tasked with providing the service. Types of Costs of Production There are various types of costs of production that businesses may incur in the course of manufacturing a product or offering a service. They include the following...

  Cost Control    Cost control is a tool of management executives to regulate the working of the manufacturing concern. Under the globalize economy, mere planning is not enough. Efforts are constantly made to scrutinize the results of the workings. If so, out of control situations may be find out and eliminated immediately, with the help of cost control, the executives can limit the costs within the planned level. Characteristics of Cost Control The characteristics of cost control are presented below: 1. Delineation of Centers of Responsibility: Overlapping operations and responsibilities destroy the very essence of cost control. 2. Delegation of Authority: If persons are charged with responsibility without authority, the cost control will be ineffective. Hence, proper or adequate delegation of authority is necessary for proper cost control. 3. Measurement of Performance: A performance is to be measured with the help of reasonable criteria....

  SCOPE OF FINANCIAL MANAGEMENT Financial Management - Meaning    Financial Management is all about planning, organizing, directing, and controlling the economic pursuits such as acquisition and utilization of capital of the firm. To put it in other words, it is applying general management standards to the financial resources of the firm. Scope of Financial Management    To understand the financial management scope, first, it is essential to understand the approaches that are divided into two sections. Traditional Approach  Modern Approach Approach 1: Traditional Approach to Finance Function    During the 20th century, the traditional approach was also known as corporate finance. This approach was initiated to procure and manage funds for the company. For studying financial management, the following three points were used Institutional sources of finance. Issue of financial devices to collect refunds from the capital market. Accounting a...

  CONSUMER BEHAVIOUR  The term consumer behaviour, individual buyer behaviour, end user behaviour and consumer buying behaviour all stands for the same. Consumer behaviour is the study of how individuals, groups and Organisation select buy, use and dispose of goods and services, ideas or experiences to satisfy their needs and wants. Consumer behaviour may be defined as the decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services. According to Belch and Belch " consumer behaviour is the process and activities people engage in when searching for, selecting,purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires ". Nature of Consumer Behaviour:  1. Systematic process :  Consumer behaviour is a systematic process relating to buying decisions of the customers. The buying process consists of the following steps :  Need identifica...

  What is Green Marketing ? Definition & Examples of Green Marketing Green marketing is the process of promoting products or services based on their environmental benefits. These products or services may be eco-friendly (environmentally friendly) in themselves or produced in an environmentally friendly way. Learn more about green marketing to see its role in business and contributions to environmental sustainability. Meaning: Green marketing involves companies promoting their products or services in a way that showcases their eco-friendliness. Green Marketing is also called as Eco-marketing, environmental marketing When a company showcases its eco-friendliness, that may include products: Manufactured in a sustainable fashion Not containing toxic materials or ozone-depleting substances Produced from recycled materials or able to be recycled Made from renewable materials Not making use of excessive packaging Designed to be repairable and not thrown away Gree...

    Components of Marketing Mix Meaning : According to Stanton, ‘marketing-mix is a combinl, pricing structure, distribution system, and promotional activities used to satisfy the needs of an organisation’s target market (s) and, at the same time, achieve its marketing objectives. The elements or variables mixed with the marketing-mix have been developed to a lengthy inventory. Several scholars have classified the varied elements of marketing-mix. In order to satisfy the needs and wants of its customers, a business enterprise must develop an appropriate marketing mix. The components of marketing mix are as follows: 1. Product 2. Price 3. Place 4. Promotion. Components of Marketing Mix: Product, Price, Place and Promotion Components of Marketing Mix  – Classified by Scholars The elements or variables mixed with the marketing-mix have been developed to a lengthy inventory. Several scholars have classified the varied elements of marketing-mix. The scholars are not of ...

ZERO BASE BUDGETING (ZBB) Meaning: It is a management technique aimed at cost reduction. It was introduced by the U. S. Department of Agriculture in 1961. Peter A. Phyrr popularized it. In 1979, president Jimmy Carte issued a mandate asking for the use of ZBB by the Government. ZBB - Definition: “It is a planning and budgeting process which requires each manager to justify his entire budget request in detail from scratch (Zero Base) and shifts the burden of proof to each manager to justify why he should spend money at all. The approach requires that all activities be analyzed in decision packages, which are evaluated by systematic analysis and ranked in the order of importance”. – Peter A. Phyrr . It implies that: → Every budget starts with a zero base → No previous figure is to be taken as a base for adjustments → Every activity is to be carefully examined afresh → Each budget allocation is to be justified on the basis of anticipated circumstances → Alternatives ar...

  Cost Control - Meaning, Characteristics, Steps & Advantages MEANING: Cost control is a tool of management executives to regulate the working of the manufacturing concern. Under the globalize economy, mere planning is not enough. Efforts are constantly made to scrutinize the results of the workings. If so, out of control situations may be find out and eliminated immediately, with the help of cost control, the executives can limit the costs within the planned limits. In simple meaning, Cost Control refers to controlling the rising cost and ensuring that the costs couldn't cross the prescribed limits. CHARACTERISTICS OF COST CONTROL The characteristics of cost control are presented below: 1.  Delineation of Centers of Responsibility: Overlapping operations and responsibilities destroy the very essence of cost control. 2.  Delegation of Authority : If persons are charged with responsibility without authority, the cost control will be ineffective. Hence, prop...

Management Accounting Meaning: Management Accounting is the mechanism for presentation of accounting information in order to formulate the policies to be adopted by the management and assist its day-to-day activities. It can be said that,  Management Accounting  helps the management to perform all its functions including planning, organising, staffing, directing and controlling. Management Accounting presents to the management the accounting information in the form of processed data which it collects from Financial Accounting, Cost Accounting including Statistics so that it will be very helpful on the part of the management to take proper decisions in a scientific manner as and when necessary. Functions/ Objectives of Management Accounting : The primary objective of Management Accounting is to present the accounting information to the management. 1. To assist Planning & Forecasting: Management Accounting assists the management in planning as well as to formulate pol...