TABLE OF CONTENTS
Table of contents
1.1 Aims and Objectives of the Study
1.2 Scope of the Study
1.3 Significance of the Study
1.4 Statement of the Problem
1.5 Limitation and Problem of the Study
1.6 Historical Background of the Case Study
1.7 Definition of Terms
2.1 Review of Related Literature
2.2 Objectives of Budgeting
2.3 Essential of Budgeting/Budget
3.0 Research Methodology
3.1 Data collection
4.1 Data Presentation analysis and interpretation
of the findings
CONCLUSION AND RECOMMENDATIONS
Two of the basic functions of managers
are those p1anning and control.
Planning is the most essential thing
that determine the goals and objectives of an organization, and best way in
which these goals can be accomplished.
Control, on the other hand includes all
these activities that ensure actions of the organization are towards the stated
In order to ensure that the company
achievers its aims and objectives with in the minimum cost, the company will
make a projection of its cost and revenue through a budget which controlling
the cost and ensure that corrective actions are taken when ever cost are
incurred by means of budget control.
Lucey 1997 defines budget as “a plan
quantified in monetary terms prepared and approved prior to time usually
showing planned income to be generated and planned expenditure to be incurred
during the period and the capital to employ to achieve the given objectives.
Budget control is defined by the
institute of cost and management account in 1966 edition as “the establishment
of budget relating to responsibilities of executive to the requirement of a
policy and the continuous comparison between
actual and budgeted result whether to ensure by individual action of the
objective of that policy to provide a basis for its revision.
Simeon Ibitayo defined budgetary
control as “the process of comparing the actual result with the planned performance
and highlighting variance therefore which can be analyzed by cause and
Batty 2006 defines budgetary control as
“a system which uses budget as a means of planning and controlling all aspects
of production and selling commodities or service”, budgetary control, therefore
relates to the use of budget as control device where by predetermined plans or
standard output, income and expenditure are compared with actual attainment so
that, if necessary, corrective action may be taken before it is too late.
The aim of any business organization is
to maximize profit and this is usually achieved by effectively planning for the
accumulation and control of its cost.
A company can project what profit or loss
it would make at the end of a particular accounting period by preparing a master
budget. The master budget would normally undergo series of amendments, but ones
it is finally approved, it becomes the target for the company during the budget
It also shows the effect of estimated
profit and loss account for the budget period and estimated balanced sheet as
at the end thereof.
In any organization where budgeting is
used as a means of attaining effective management performance, that is used in
decision making, many alternative plans have to be considered and the most
profitable one will adopted. For instance where the chosen plan result in great
expectation, then the available resource has been made use of effectively and
this show a positive link with organization plan. Cost of performance is
employed through the operation of budgetary control system which also head to
departmental operational statement for comparing budgeted and actual results.
The overall plan is represented in the
budget that is what profit and return on investment are expected to be obtained
are example of matter to a covered. The dully activities are scheduled and make
up the weekly, quarterly and yearly budget.
At this junction, the executive are
appointed to cost center to carry out the required policy so comparison can be
made between actual budget and budget results.
The internal statement will be prepared
to show actually budget and budgeted result, which may require explanation for
any deviation that may occur, though this technique efficiency will be
increased with minimum use of capital to maximum profit.
The decision to be made about a budget
is to choose between goals and average expected performance. The way in which
these goals can be used in the part of budget is to separate the control
information and planning information into two, one for controlling the operation
and the other to plan the available resources of the firm on the whole.
Budgetary control is a system of
controlling cost which includes the preparation of budgets, coordinating
department or establishing responsibilities.
In this way, responsibilities of
fulfilling the budget plan can be delegated to the manager in charge of each
budget center so that budget center will be the same as the subsidiary budget.
(Sales, production. purchasing) and responsibilities for fulfilling budget will
rest with the manager involved e.g. sale manager, purchasing manager etc. top
manager still has overall responsibilities in particular for the efficient use
of available capital based on actual performance with that budgeted and acting
upon result to achieve maximum profit.
AIMS AND OBJECTIVES OF THE STUDY
Many organizations are in ruin today,
also many countries are economically stagnant, because they don’t know the
importance of budgeting. Hence, this project work is written to open the eyes
of such organizations and countries to employee the study to curb the problem.
Therefore, the aims and objective of
this research work is to take a brief look at the following:
identify the planning and control system
know the kind of problems encountered in carryout these goals.
look into where are variance and the reason for such variance
1.2 SCOPE OF THE STUDY
The scope of this project work is to
examine what budgeting and its process are all about and how can its
effectiveness enhance decision making in an organization with a particular
reference to the case study Okin Biscuit Limited Offa, Kwara State.
1.3 SIGNIFICANCE OF THE STUDY
The importance of this research work
helps to analysis the problems encountered and provide solution to those
problem facing organizations.
This project work is of great benefit
to outside public concerning the effectiveness and efficient of their business.
1.4 STATEMENT OF THE PROBLEM
The budget is a financial which set out
estimate of government expenditure and revenue for the coming years. It is a
document indicating the total and composition of government expenditure and the
source from which such expenditure are expected to be financed in the course of
the years. It is prepared by the ministry of finance and presented to the legislature
bodies for approval. In a document system it was unlawful to spend money
without the approval of the parliament.
revenue exceeds expenditure than the budget referred to as a surplus budget
In another way when
expenditure exceed revenue anticipated
then the budget is referred to as a deficit budget.
government spends more than it rises, where does the shortfall money comes from?
government rises more than it spends where does surplus go to?
Budget could be used to stabilize the
economy. This is because the variation in government expenditure and taxation
is inherent in budgeting decision and this can be used to correct economy
problems such as inflation, unemployment low level of aggregate demand, etc in
a particular nation.
Budget could be used to manage and
control government expenditure. This will allow accountability as well as
efficient use of government resources in an economy.
1.5 LIMITATION AND PROBLEM OF THE STUDY
In the area of limitation to the
research work this can be traced to financial resource, time constant and
limited cooperation among the group.
Obviously, a lot of problems have been
faced along the course of study to mention but few.
The major constraint on this research
work is the non availability time to conduct an indebt research. Truly, it has
not been easy but never-the-less makes use of the little available time.
Also, the unwillingness to management
to allow the research gain access too many information needed like books,
records and thus not all owing them to verify the correctness of the data made
available to them.
Another problem is the limited
financial resources available which hinder sampling. However, despite all these
constraint enough data was collected for meaningful analysis.
1.6 HISTORICAL BACKGROUND OF THE CASE STUDY
Okin Biscuit Limited was incorporated
in 1978, clearing of land and building construction was done in September 1979,
while plant and machinery were imported by December, 1979.
The organization started operation
fully in June 1980 with more than two hundred and fifty workers and with about
2 million as capital outlay. It has celebrated it 25th anniversary
of fully operation in the year 2005. The organization is sited along Ajasa-Ipo
Road at about five kilometers (5kms) to Ajase-Ipo Township from Offa. It covers
a total land area of about thirty five hectares half of which has been
developed with building and administrative area in 1980, when the organization,
began operation, it started production of variation of Biscuit such as Cabin, Gem,
Coaster, Shot Cake etc.
Before the end of 1980 machinery of Okin
Foams (division of Okin Biscuits Limited) arrived and production of form began
in the year 1987.
In the last 30 years, Okin Biscuit
growth is so drastic that it has as staff about 100 people, talking of their
welfare, and staffs of this industry enjoy optimum care from the industry and staff
welfarism is the watch-word of the industry. This could be evidenced by the
wages being paid to them of recent the last minimum basic salary with other welfare
packages like over time allowance among others.
It is worthy of note that this industry
has since its 3O years of corporation contributed largely to the improvement
standard of Offa people and its environs, based on the fact that it’s the only
industry that has succeeded in employing about 1000 people, both from within
and outside Offa town (this includes graduates and other categories of people)
1.7 DEFINITION OF TERMS
be defined as a future plan of action for the whole organization or section
is a systematic and formalized approach for starting the planning,
co-ordination and control responsibilities
of management in such a way to maximize the use of resource (Adams 1964)
Budgeting Process: It involves the determination of expenditure priorities of the government with the method generating
Budget Deficit: Is
occurs when the projected revenue fall short of projected expenditure (A. SAKA
Balance Budget: Is
said be balance if the project government revenue equals projected government
expenditure (A. Saka)
Zero Budgets: A
method of budgeting whereby all activities are revaluated
each time a budget is formulated (CIMA).
Surplus Budget: Is
said to be surplus when projected revenue is more
than the expenditure (SAKA 1999)