21.4. Budgetary Control: Concept and Process

Try these first

1. 1.

   Define budgetary control in your own words.

   Hint

   Consider how budgets help in tracking performance.

2. 2.

   What is the first step in the budgetary control process?

   Hint

   Think about what you need before monitoring performance.

3. 3.

   What is budgetary control?

   • Using budgets to plan only
   • Monitoring and controlling operations through budgets
   • Only analyzing variances

   Hint

   Think of control as something more than just planning.

4. 4.

   True or False: Corrective actions are taken only at the end of the budget period.

   • True
   • False

   Hint

   Consider how dynamic business operations are.

5. 5.

   A company has budgeted $100,000 for a project and has spent$120,000 by mid-project. Discuss the approach to take for variance analysis and corrective action.

   Hint

   Focus on root causes rather than just the overspend.

6. 6.

   Describe how effective budgetary control can influence strategic decision-making in an organization.

   Hint

   Think about the links between budgeting and strategic goals.