Acc Project 3

8/12/2019 Acc Project 3

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RELEVANCE OF BUDGET AND BUDGETORY

CONTROL IN AN ORGANISATION

By

ESHIKWE BLESSINGESITM/PT/SBS/ACC/10/01272

EDO STATE INSTITUTE OF TECHNOLOGY AND

MANAGEMENT, USEN.

DECEMBER, 201.


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BUDGETING AND BUDGETARY CONTROL IN A

MANUFACTURING COMPANY

By

ITIMAH SPLENDOUR FAITH

ESITM/SBS/ACC/11/!2"

BEING A PRO#ECT SUBMITTED TO THEDEPARTMENT OF ACCOUNTANCY, SCHOOL OFBUSINESS STUDIES, IN PARTIAL FULFILLMENT

OF THE AWARD OF NATIONAL DIPLOMA INACCOUNTANCY

DECEMBER, 201


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CERTIFICATION

I certify that this project work tilted B$%&'()*& A*%

B$%&'(+y C-*(- )* + M+*$+($)*& C-+*y)

was carried out byI()+3 S'*%-$ F+)(3 with

M+( N- ESITM/SBS/ACC/!2" of the 'epartment

of Accountancy in &do State Institute of Technology.

(sen in partial ful+llment of the Award of ational

'iploma in Accountancy.

44444444444444444444444 44444444444444444A'%$ .#. M. 'ateProjectSupervisor

555555555555555 555555555555O3-*6+ E.O 'ateHead of Department


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DEDICATION

My dedication goes to Almighty -od for his Mercy an

protection towards my late an angels especially St

Michael the Archangel who has been my safeguarded

and St. Monica My patron and to the Mother of -od. An

to my one an oving #ather especially my daddy who

has been so faithful to me my mother my brothers

aunt. /onsumes and to all woloko family. astly to all

/atholic priest and seminars


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ACKNOWLEDGEMENT

My utmost gratitude goes to -od who has been my

strength for the wisdom and enablement he has

granted me in all spheres of life. Also my profound

gratitude goes to my project supervisor Mr. Amedu

Michael who ensured that this work came out as a

master peace and not just another project.

All thanks goes to my mentor "ev. #ather Adolphus

(mechukwa for his prayers and care and to "ev. #ather.

Michacl yenafoh who assist me +nancially and to

pastor an+p Thomas -oselle for his prayers.

I will say those I did not include their names, may -od

bless you. My appreciation goes to my lecturers and my

course adviser Mr. Sadi0 for his advice and to my lovely

family who has been there for me. #irstly my 'addy Mr.

Ale1 Itimah for his prayer and kindness and to my ate

Mother who died for my sake and to my lovely brothers,

Mr. &romosele Itimah for his time and support and $lus

Itimah and inus Itimah and to my loving sister Mrs.-loria Aghedo Mrs. "osemary 'ano &ruse and astly

Miss Isimary itimah and to all my relations an friends.


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TABLE OF CONTET

Title page 2 2 2 2 2 2 2 i

Approval 2 2 2 2 2 2 2 ii

'edication 2 2 2 2 2 2 2

iii

Acknowledgment 2 2 2 2 2 2 2

iv

Table of /ontent 2 2 2 2 2 2 2

v

Abstract 2 2 2 2 2 2 2 vii

CHAPTER ONE8

INTRODUCTION

3.3 %ackground of the Study

3.4 Statement of $roblem

3.5 bjective of the Study

3.6 Scope of the Study

3.7 Signi+cant of the Study

3.8 9ypothesis Statement

3.: imitation of the Study

3.; 'e+nition of Term


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ABSTRACT

This research work is de+ned to obtain empirical data

on budgeting and budgeting control in a manufacturing

company with reference to igeria %reweries $lc.

The objective is to e1amine the techni0ues of

budgeting as t relates to management e


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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

&very business oriented organi!ation is aimed

among others at making pro+ts as high as possible. All

e=ort therefore are diversi+ed at e=ective planning

process with minimum lost involvement in other words,

it means that all speci+c aims and objectives of the

organi!ation can be achieved through proper planning,

controlling and coordinating activities.

In pursuit of the organi!ations aims and

objectives, resources of the business will be employed

therefore a 0uantitative document is needed for setting

out objectives, targets and resources with which to

achieve the target. This is known as a budget.

The managerial function of an organi!ation is so

important that the continued e1istence of the

organi!ation is tied to how e


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An organi!ation desirable level of growth and

pro+tability can be achieved by early implementation of

plan and strategies, this re0uirement show more in

manufacturing industries to be precise where there is a

keen competition. A budget therefore is a means of

achieving organi!ational goals. It could be seen that

budget is the most important decision making process

and policy in an organi!ation. Thus budget is seen as an

important reference document at every level.

There are di=erent types of budget for di=erent

organi!ations and entities. It should be observed that

whatever the kind of structure of budget, they are use

for purpose of ma1imi!ing managerial e


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showing the causes of such and informed decision to

prevent re2occurrence, hence in a system of budgeting,

standard setting and analysis of budget variance are

integral parts.

It is important to note that most organi!ation

targets are pro+t ma1imi!ation with the use of budgets

the company would have a greater control of the

activities of the companies and that serves as a check

and balance.

Although, the use of budgets as a managerial tool

can be applied to both individuals and business

organi!ation alike, the researchers in this research

study is concerned with the e=ectiveness of budgeting

and budgetary control in a manufacturing industry and

igerian %rewery $lc, in particular.

The above name company is chosen for study

because it is a manufacturing organi!ation that has

various compartments >i4? marketing, production and a

budget to be able to correlate the in@ows and out@ows.

The revenue and e1penses that were accrued helps to

know the pro+tability range when actual estimatewould have been compared with estimated values.


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There is therefore a need for organi!ation that

does not want a disintegrated organi!ation to embrace

the use of budgets since it helps to co2ordinate the

activities of di=erent departments or subunits of the

industry, and it also helps to motivate and authori!e

actions, so as to fully reali!e its sole purpose of the

establishment as a manufacturing organi!ation.

It is therefore seen that budgeting and budgetary

control is an economic instrument which can direct a

nations state or organi!ations growth and

development. /onclusively budgeting can be seen as a

weapon or instrument, which holds organi!ational

heads accountable.

1.2 STATEMENT OF RESEARCH PROBLEM

There is nothing as bad as not planning in a

business circle. Many business operators will not want

to go out of business, the mistakes still remains that

some of them do not take pains to work according to

their own budget.

Boung industries see budgeting as a mere

formality while the actual performance will be far awayfrom the estimates which are supposed to be a guide in


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their drive towards revenue generation and

e1penditures.

The 0uestions that really come to mind therefore

are as follows?

3. 'oes budgeting actually guide against resource

wastingC If so, how does it reduce cost and

increase pro+t earning.

4. Dill proper budgeting actually help achieve the

+nancial objective of an organi!ationC

3. 'oes budgeting not look like a waster of time

and e=ortC If not how does it assist the

organi!ation.

1. OB#ECTIVES OF THE STUDY

9aving fully analy!ed the problems relating to

budgeting and its control, the study intends to throw

more light on budgeting and budgetary control with

particular reference to igerian %rewery $lc with)

a. A view to determine their e=ectiveness in the

managerial process of t the company

b. Another reason for this study is for one to be able

to integrate the various units so that the over allgoal of the organi!ation could be seen if actually

achieved.


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c. To advance useful recommendation based on the

+ndings to the company on how to improve on

their systems of budgeting as a tool to

management planning and control.

d. It is also meant at broadening the knowledge and

understanding of all students, especially

accounting students, lecturers and a layman alike

on the concept of budgeting an budgetary control,

since its forms an important aspect of the life

EgrowthF of individuals, organi!ations etc.

1." SCOPE OF THE STUDY

The scopes of the study are set below

i. This research work intends to focus on

budgeting and budgetary control system in

igerian %rewery $lc.

ii. A detailed study of the type of budget being

prepared by the igerian %rewery and how

these budgets are being controlled so as not to

allow for deviation.

iii. Also an in2depth study will be carried out on the

advantages and limitations of the budgets ofthe %rewery Ei.e those factors or constraints not


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allowing the organi!ation to carry out its budget

plannedF.

1.! SIGNIFICANCE OF STUDY

In recent times, there have been many cases of

corporate failure as a result of little or no planning of

business activities is organi!ations.

There is no doubt that budgeting plays a vital role

in the planning process. 9owever, this has been given

ade0uate attention as stake holder sees it as a waster

of limited resource and time.

9ence the importance of this study at completion

includes)

The critical analysis of the role of budgeting to

corporate performance especially in the

manufacturing sector. It will show how budgeting can actually help

achieve the +nancial objective of an organi!ation.

#inally, it will improve on the various research

works which have been performed in this +eld.

1.9 RESEARCH HYPOTHESIS.

A hypothesis is a tentative answer to a research

0uestion. ften stated in form of a relationship between

a dependent and an independent variable. ormally,


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hypothesis is divided in null hypothesis E9GF and

alternative hypothesis E93F

ull hypothesis of any assumption is that

hypothesis that states an assumption not to be true,

while the alternative hypothesis is the opposite of null

hypothesis.

9ence in the light of the introductory observation

which culminate in the problem statement, stated

objectives and within the scope of the study.

a. 9G organi!ational activities cannot be e=ectively

controlled through the use of budgeting.

93 organi!ational activities can be e=ectively

control through the use of budgeting

b. 9Gbudgeting and budgeting control is not a good

control device by management to avoid wastage

of resources, time and e


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d. 9G there is no direct relationship between

managerial e


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5. There were also constrained by the companys

rules and regulations. These constrains were

related to the release of vital information about

the company to outsiders.

6. 'ue to poor record keeping situation in the

company, past information and recorded

information were not made available to compare

past budgetary with the present budget being

made.

7. Time and +nance was another major constraint in

carrying out this research work

1.: DEFINITION OF TERMS

B$%&'(8 A budget is a 0uantitative e1pression of a

planned action prepared in advance of the period to

which it relates.

B$%&'(+y C-*(-8 These could be de+ned as the

establishment of budget, relating the responsibility of

the e1ecutives to re0uirement of the policy and the

continuous comparison of actual performance with

budgeted level so as to secure either by individual or

collective action the objective of such policies or arevision thereof.


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C-*(-8 This is the process of ensuring that a +rms

activities conform to its plans and that its objective are

achieved. 'istinguishes between control and controls)

controls are measurements and information where as

control means direction. In other words controls are

purely a means to an end) the end is control. /ontrol is

the function which makes sure that activities work is

done to ful+ll the original intention. /ontrol deals with

e1pectations, that is with the future control is

normative and concerned with what ought to be.

O6;'()


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enable an organi!ation achieve its objective. It speci+c

Hhow the goals will be achieved Adeniji E4GG6?5GGF

P+**)*&8 $lanning is a means to arrange before hand

the activities of the future. $lanning means a properly

coordinated and comprehensive plan for the whole

industry.

F'=)6' B$%&'(8 #le1ible budget is a budget, which is

designed to adjust the permitted cost levels to suit the

level of activity actually attained. A @e1ible budget is

designed to change as the volume of output changes.

F'='% B$%&'(8 Is a budget, which is designed to

remain unchanged irrespective of the volume of output

or turnover attained i.e. it is a single budget with one

analysis of cost.

B$%&'( M+*$+8 Is an instruction of information

manual. This embodies the set of instructions and

pertinent information regarding the budget and its

preparation. It serves as a rule book for the

implementation of budget programme as it speci+es

what to do, where, why, by whom and how to do it. It is

a useful document, which enables members of thecommittee especially new budget o


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grasp of all that budget preparation and

implementation in the organi!ation entail.

P')-% - T)'8 $lanning and budgeting must be

related to a speci+c period of time. The general process

of budgeting breaks down long range plans and short

range plans. %udgets can be prepared for any length of

time and longer periods may be appropriate for

particular types of budgets.


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CHAPTER TWO

LITERATURE REVIEW

2,1 AN OVERVIEW OF BUDGETING

The concept of budget was derived from the

#rench word bongetteJ which means a leather beg or

large2si!e purse which travelers many centuries ago

hung on the saddle of their horse. It symboli!ed a bag

containing +nancial proposal of the +nance minister of

government.

As for the budgetary system, it evolves out of

controversy in %ritain. It began +rst to be applied by

governmental institutions.

#or centuries, the %ritish government was only

interested in restricting the amount that the sovereign

levied on subjects. %ut when it came to spending, these

was no restriction he spent the money as he pleased.

ater owing to power struggle between the legislative

and e1ecutive branches of the government, it became

the prative that e1penditure must @ow from

appropriations and appropriations were to be made for

speci+c purpose.In #rance also, the budgetary system emerged out

of the controversy. That was during the apoleon wars


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when a man called $itt attempted to ensure that

parliament should review simultaneously the total

income and e1penditure of the national government.

9ence $itt E4GG4F is regarded as the father of

budgetJ

In the business enterprise, however, the use of

budgets as a +nancial control tool of management is

historically rather young phenomenon. #or instance in

the united state, that seems to date around 3K4G, early

budgetary principles for business enterprise are

believed to have derived from two source. #irstly from

the speci+c movement and secondly from the

government budgetary techni0ues.

%udgetary control system is regarded as a logical

e1tension of Taylors scienti+c movement. arge scale

application of the system is adduced to have started in

the depression years after 3K5G. thus today, besides

governments, progressive business and enterprise use

budget and budgetary control system in one way or the

other. %udget has given accountants and budgetary

control system in one way or the other. budget hasgiven accountants and business managers alike a

concern as to how best this concept of budget can be


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applied in e1ecuting their managerial function of

planning and controlling the activities of their

organi!ation.

The emphasis on budgeting has seen on its e=ect

on planning and controlling of the entire operations of

the business. The techni0ues of budgeting and

budgetary control are far more than an accounting

e1ercise. They involve all level of management, for

e1ample, the appraisal of the whole organi!ational

plans, strategies, and objectives and how to impact

these plans strategies etc. on the organi!ations

pro+tability and growth.

%udgetary control embraces e


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A budget is a comprehensive and coordinated plan

e1pressed in +nancial terms, for the operations and

resources of an enterprise for some speci+c period in

the future.

ucey E4GGG?4:GF de+ned A budget as a plan

e1pressed in money. It is prepared and approved prior

to the budget period and may show income,

e1penditure and capital to be employed.

koye E3KK:?564F described budget as +nancial

statement prepared and approved prior to a de+ned

period of time, of the policy to be pursued during that

period for the purpose of achieving a given objective.

%udget could be prepared for particular department or

sections within the organi!ation or for the entire

organi!ation.

#rom the above de+nition it can be said that

budget is a statement which is prepared even before

the commencement of the operations of the

organi!ation, and the statement e1presses not only the

monetary terms of the business plans, but also other

policies, programme strategies that the businessintends to achieve within the given period covered in

the budget such policies programme and strategies


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include pro+tability, growth, policies, e1pansion

strategies and the totality of programme aimed at

systematically achieving the corporate objectives.

9ongren E3KKK?3K6F sees budget as a 0ualitative

statement that translates the intentions of the business

organi!ation. This means that budget are used to

integrate and co2ordinate plans to various sub2unit of

the organi!ation for the e=ective achievement of the

desirable objectives of the organi!ation. Therefore

various departments of the budgets are incorporated

into a mean master budget.

In view of %rown and 9oward E3KK7F, budget was

described as a predetermined statement of the

management policy during a give period, which

provides a standard for comparison with the result

actually achieved. This means that, a budget is a

standard which is used to measure the actual

achievement of people department and +rms. It can be

said that this is a measure of performance of the

various units and costs center of the organi!ation, and

hence management is informed as to the e


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Dith such information, decision making is also

facilitated.

In divided managers by preparing budget provide

a bench mark with which performance can be

objectively assessed. This will necessitate the

acceptance of the budget as reasonably by those

responsible for carrying it out.

It is very important that management should be

made aware as soon as possible of any new trend

whether in relation to production or marketing. The

budget by providing speci+c e1pectation with which

actual performance is continuously compared, supplies

a mechanism for early detection of any une1pected

trend.

The budget communications in the business are of

two levels. #irstly during its preparation, it involves a

two way communication process which is between top

management and the managers about objectives and

methods of achieving them. Secondly, it communicates

from management downwards the objectives of the

+rm after the budget is prepared.9aving set goals for the organi!ation management

uses the budgeting system to control the running of the


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business to see that the goals of the organi!ation are

achieved.

%udget has been de+ned in slightly varying way

by di=erent authorities. 9ongreen de+nes budget as a

0ualitative e1pression of a plan of action and an aid to

coordination and implementation. %rown et al E3KKKF

stated that budget is a predetermined statement of

management policy during a given period, which

provides a standard for comparism with the results

actually achieved. In another de+nition the author

de+nes budget as a +nancial or 0ualitative plan of

operations for a forth coming accounting period.

ooking at the various de+nitions, the following

conclusions can be drawn that, budget can be applied

in any organi!ation where there are objective to be

pursued, be it a pro+t or non2pro+t oriented

organi!ation.

%udgets are themselves not an end but a means

to an end, for instance while 9ongren sees it as useful

coordination function. %rown et al looks at it as among

other things a standard for performance evaluation. Inthe whole, however, there is a consensus that budget is

a plan.


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It has been generally recogni!ed that budgeting

and budgetary control forms the bed rock for achieving

most of the objectives of any organi!ation.

%efore a budgetary control system can be

introduced, it is essential that key e1ecutives are

committed to the proposed system and to ensure that

long term objectives of the organi!ation must have

been de+ned. The organi!ation can be logically divided

into budget centers, such that each manager has a

budget for and is control information about areas he

can control.

%udget provides measure of performance, which

can be compared with the later budget result.

Individual manager may be monitored by budget,

failure to achieve target may result in loss of

con+dence in the budgeting system.

%udgeting control can be de+ne as a process

whereby +nancial control makes use of budget. It is a

process of comparing the actual performance on

regular basis with budgeted targets and taking the

corrective action on budget variance in order to meetthe corporate objectives. Thus budget act as an

instrument of control. Aigbokaevobolo E4GG4?K;F


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budgetary control is therefore a vital management tool

for performing basic management functions.

%rown et al assert that budgeting is essentially

concerned with planning while budgetary control is a

system of controlling cost which incudes? the

preparation of budget, coordinating the department

and establishing responsibilities. /ompany actual

performance is compared with that budgeted and

cating upon result to achieve ma1imum result wler et

al attempted to give some mark distinction between

budget and budgetary control.

A budget is a standard with which to measure the

actual achievement of peoples department, +rms etc.

budgetary control is the planning in advance of the

various functions of a business so that the business as

a whole can be controlled.

%udgetary control is seen as a control mechanism,

which is used through out the period the budget plan is

carried out. The main aspect with which budgetary is

concerned is in comparing actual results with what was

planned to happen in the budget. %udgetary control istherefore a vital management tool for performing basic

management function.


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The list of de+nition of budgetary control is not

e1haustive. 9owever these numerous de+nitions do not

fail to emphasi!e or highlight an important point that

the whole idea about budgetary control is the process

of e=ectively implementing the budgets to achieve its

de+ned objective. %udgetary control are essentially

forward looking, they provide yardstick for purpose of

comparism. The success of a budget depends on the

e=ectiveness of its budgetary control.

The diagram below shows the main features of a

budgetary control system.

#or e=ective management there is need for a good

organi!ational chart in an organi!ation which carries

out responsibility centres. &ach responsibility center

must have its own budget and cost controllable by the

manger of the section. The organi!ational chart of

budgetary control system helps the @ow of budget

information and implementation as illustrated in +g3.

Main features of procedures of a budgetary control

#ig 3. %udget $rocedure

Establishedobjectives


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Source? koye E3KK:? 566F cost accountancy

management operational applications.

%udgetary control could be seen as a control

cycle. 9ere the management, accountants have the

task of providing a feedback of control information with

this budgetary control cycle. Through the control cycle,

information can be transmitted to the people who are

responsible for comparing them against a budget and

initially control action.

2.2 ESSENTIALS OF BUDGETARY

3. %udgetary control is the preparation of targets or

budget for agreed areas of business. An area may

be functional management area such as sales,

purchase or production etc.

4. %udgetary control helps to de+ne the objectives of

the organi!ation as a whole, and within this overall

frame work, de+nes the result, which each

department and its personnel should achieve.

5. %udgetary control has a control yard stick and

when actual results are compared with budget

+gure, management should be prompted intoaction.


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drawn up. ne of the ways for achieving such

congruence is to allow people i.e operator to participate

in the setting of their own budget. Dhen operators fully

participate in the budgeting process, they will regard

targets as their own and would do everything possible

to have them achieved. Dhen, however, the operators

do not participate in the budget preparation, they can

easily justify deviation on impossible targets, 'rury

E3KK4F holds the view that participative style of

management will not necessarily be more e=ective

than other styles and that participate methods should

be used with care. Amos, E4GG4?56F.

GOAL CONGRUENCE

The need to create situation in which each

individual on attempting to satisfy his own needs will be

making the greatest possible contribution to the

accomplishment of the goal of the organi!ation.

ucey de+ned goal engruence as the goals of

individuals and groups, which should coincide with the

goals and objectives the organi!ation as a whole. ucey

E4GG4?5KKF.M-()


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ucey E4GG4?5KKF de+ned motivation as the need

to achieve selected objectives and resulting drive that

in@uence action towards the selected objectives.

%udgets are used to motivate mangers and

members rather than create resentment and adverse

reaction. It can assist an operator to monitor his

performance. $erformance is the best reward and

recognition factor in any organi!ation. The knowledge

that budge is a performance evaluation device.

Managers attitudinal change to the entire badgering

process as it motivate them to strive to achieve budget

goals and hence e1cel. Motivation re0uires the full

involvement and continuous participation by all levels

of managers in planning and control process, their

acceptance of the budgets and attainable levels of

performance being set.

DYSFUNCTIONAL BEHAVIOUR

/aplan, suggest that there is ample evidence to

support the premise that behaviorally naLve

management accounting techni0ues, such as budgeting

can serve as deterrent to goal congruence, undercertain circumstance can be a source of such


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undesirable behaviour responses as frustration, con@ict,

rigidity if the budget results in dysfunctional behavior.

2." PREPARATION OF BUDGET

The way the budget is prepared varies from one

organi!ation to another based on the si!e of the +rm,

product, and degree of uncertainty, which the

organi!ation faces. All +rms are uni0ue, each produce

budget in a particular manner. Inspite of all this certain

procedures must apply in almost all budget situations.

The following details se0uences of steps are

adopted in the budgeting process.

3. The budgeting preparation usually originates from

the budget o


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5. eys forecast of activities, costs and sales are

made with suboptimal participation of all budget

holders using appropriate forecasting techni0ues.

6. Sectional or sub2unit draft budgets often called

estimates are prepare by the budget o


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holders for their information and implementation,

Abohi E4GG4?4K6F

The diagram illustrates the budgetary process

Source? an insight into management accounting by

Adensi A. Adeniji E4GG6?5G7F natural. $eriod of budgets

can be prepared for any length of time and longer

period may be appropriate for particular types of

budget.

3. The control aspect

4. The type of business

3. T3' -*(- +>'(8 %udgetary control implies

control, and its obvious that long budget periods cannot

be e=ective means of controlling a business,

particularly in respect of e1penditure, which must be

rigidly scrutini!ed at short intervals. It is therefore

usually arranged that the budget should be for a short

period, so that actual results can be compare with

those budgeted.4. T3' (y' - 6$>)*'>>8 Industries in which capital

e1penditures is high and long2term planning is

Derive key forecast


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2.9 BUDGET CENTRES AND COST CENTRES

A budget center is de+ned as a section or entity

for which control may be e1ercised and budget

prepared.

A cost center is an identi+able function or part of

the organi!ation for which cost can be identi+ed. It is

de+ned as apart of a business unit ucey E4GG4?5K3F

each area selected as a budget center should be early

de+nable and should be the natural responsibility of

one particular manager. A budget that relates to the

centre is referred to as departmental budget.

2.7 THE MASTER BUDGET

Dhen the functional budgets have been prepared,

the budget o


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After the budget has been prepared and approved

a continues @ow of report is re0uired each mouth or

0uarter, depending on organi!ation to show comparison

of actual performance with the budget.

"eports will be issued to head budget centre

showing favorable or adverse variations from budget.

"eports should show percentage of variation, where

percentage of vacation is signi+cant, and investigation

must be instructed so that the report would be able to

e1plain the de+nite causes. This will enable remedial

action to be taken before it is too late.

2.? BUDGET ADMINISTRATION

%udget administration is the process of planning,

organi!ing, coordinating, directing and controlling of

budget activities. Is the development and utili!ation of

a budget. The success of budget depends on its

administration. thus, the budget administration must

involve every department or sector of the +rm.

2.10BUDGET COMMITTEE

This usually comprises the budget o


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those co2opted to advice on particular aspects of the

budget where their e1pertise may be necessary.

The main functions of a budget committee are as

follows?

3. &stablisher or creates realitic idea valuable to the

organi!ation.

4. Act as a coordinating device that brings the e=ort

of those engaged in the preparation of the budget

and clear any con@ict.

5. "eceiving and e1amining the +ctional budget to

ensure that they conform to the corporate

objective.

6. Identifying the limiting factors and suggesting

revisions where necessary.

7. Specifying the dates fro preparing budget and

procedures for submitting budgets

8. Advise the management by issuing budget

guidelines

:. "ecommend budgetary control system

;. 'raft +nal budget. Aigbokaevobolo E4GG4?;F

2.11TYPES OF BUDGET%asically budgets can be categori!ed into which

are?


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a. perating budget and

b. #inancial budget

O'+()*& 6$%&'(

Some times referred to as functional budget,

"elate to distinct operations or functions within the

organi!ation. &1amples of operational budget are sales

budget, production budget, material cost budget,

labour cost budget, overhead budget and low cost of

goods sold budget.

S+' 6$%&'(

The sales budget is the most important and also

the most di=erent to prepare among the operational

budgets. The sales budget is concerned with estimating

the 0uantity of goodNservice that could behold in a

given period of time and the price consumers are

willing to pay as to purchase the estimated 0uantity.

The sales manager is responsible for the

preparation of the preparation of the sales budget. This

sales budget will be based on the sales forecast.

&1ample of sales forecasting are market survey, buyer

intention, market testing etc. sales budget is verycritical to the success of failure of a business.

). O6;'() 6$%&'(


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The objectives of sales budget are

a. To provide a sales target, this can be achieved by

di=erent management areas.

b. To provide a revenue budget, this can be

incorporated into the mater budget so that the

business can determine the budgeted gross pro+t

net pro+t.

ii. P-%$()-* 6$%&'(

$roduction budget is the initial step in budgeting

manufacturing operations. It shows the anticipated

production in terms of units. $roduction budget are

usually prepared as soon as sales budget are

concluded.

))). M+(')+ ->( 6$%&'(

This shows the anticipated direct materials to use

in terms of money in the oncoming period for

production.

)( 6$%&'(

this shows the anticipated direct labour to use in

terms of money in the oncoming period for production.

It is usually speci+ed in terms of time and rate per hour.


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This shows the anticipated indirect labour us in the

period of production.

( - &--% >-% 6$%&'(

This is a statement showing the e1pected cost to

used directly in production of +nished goods available

for sales. Aigboaevobolo E4GG4?;;2;KF.

%. Financial Budget

These budgets are concerned with the e1pected

receipts and payment within the period of the budgets.

&1amples of +nancial budget include cash budget,

performance budget, pro+t and loss budget and

performance balance sheet.

i. C+>3 B$%&'(8 The cash budget is used to

determine the in@ow and out@ow in an

organi!ation. /ash budget is very important for

the survival of a +rm. It is used to predict the

e=ect on cash position of the levels of operations.

The purpose of cash budgets are)

a. It identi+es e1cess or shortage of cash by time

periods

b. It establishes the need for +nancingc. It establishes a sound basis for continuous

monitoring of cash position


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d. It ensures that su(' B$%&'(8 This budget combines or

summaries both the operating and +nancial

budgets.

III. P'-+*' S(+(''*( B$%&'(8 Is used to

analy!e results of revenue, cost and variance.

>ariance analysis involves a mathematical analysis

of two sets of data in order to gain insight into the

underlying causes of performance. ther kinds of

budgets are?

#i1ed budget and @e1ible budget.

F)='% 6$%&'(>

#i1ed budget are budgets prepared to suit a

particular level of activity no provision is made for any

variation in actual performance i.e. it is designed to

remain unchanged irrespective of the volume of the

output, turnover attained.

F'=)6' 6$%&'(#le1ible budget is a budget, which is designed to

adjust the permitted cost level of activity attained.


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Advantages

3. It is usually of realistic target as to take the

advantages of all opportunities that arise form

time to time.

4. It is used to determine the level of activity that

yields the highest pro+t

5. It is used in planning. /ontrolling and decision

making under uncertain business conditions.

6. It is used to ascertain relevant cost, di=erential

incremental cost and incremental revenue.

Aigbokaevobolo E4GG4?K8F

2.12BUDGET TECHNI@UES

There are three main techni0ues or approaches to

budgeting) they are !ero2based, programme planning

and incremental budgeting system.

A. ERO BASED BUDGETING BB

This techni0ue is de+ned by the chartered

institute of management accountants E/IMAF as a

method of budgeting whereby all activities are re2

evaluated each time a budget is formulated. &ach

functional budget starts with the assumption that thefunction never e1isted and so it has a !ero cost.


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Increments of cost are compared with increments

to bene+t so as have ma1imum bene+t for a given

budgeted cost. This de+nition shows that the techni0ue

attempts to ensure that projected e1penditure for

e1iting programmers start from the base !ero with

each year budget being complied as if the programme

were being lauched for the +rst time. It is indeed a

ground. (p approach as the budgets are initiated with

no consideration being give to previous budgets.

The techni0ues re0uired budget holders to justify

all spending limits or budget claims on their own merit

without reference to previous levels. It is therefore a

cost bene+t approach, which 0uestions long2standing

assumptions and serves as a tool for systematically

e1amining and perhaps abandoning any unproductive

projects. Abohi E4GG3?76F

$eter $yhor in 3K8K who was the +rst to introduce

!ero budgeting EO%%F identi+ed the following structure

systematic approach to budgeting based on !ero2based

budgeting.

a. rgani!ation are divided into sections known asdecision units

b. &ach decision units are clearly de+ned.


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c. #or each activity a decision package is de+ne for

the minimum level of spending and this sets out

the cost, the purpose of activity, possible measure

of performance etc.

d. Similar decision package are de+ned for

incremental allocations to activities.

e. The decision packages is ranked

f. Allocation of resource. Adeniji E4GG6?553F

ADVANTAGES OF ERO BASED BUDGETING BB

3. It broadens mangers knowledge and

understanding of resource input and outputs as

well as operations this enhancing motivation

4. Management attention if focused on activities,

which warrant action

5. &


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5. It is an e1pensive type of budget

4. It may be ignore the bene+ts of strategic

planning.

B. PROGRAMME PLANNING AND BUDGETING

SYSTEM PPBS

The planning programming budgeting system is a

system in which planning process is made forward by

the budgeting process, which is the +nal step. It

provides regular procedures for reviewing goals and

objectives for selecting and planning programs over a

period of year.

The programming concepts is the crucial name

relating planning to budgeting, converting planning

from paper e1ercise to a signi+cant part of the decision.

The aim of planning programming budgeting

system is to enable the management of non2pro+t

organi!ation to make more informed decision about the

allocation of resources to meet the over all objectives of

the organi!ation.P

The +rst stage is to review the organi!ation

objectives for the activities which it performs. Thesecond stage is to review involves in identifying and

evaluating alternative methods of achieving the


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objectives for each speci+c programme. Such

comparison and evaluation will show the cost of each

alternative course of action and the bene+t result. The

last and +nal stage is to select the appropriate

programme on the basis of costNbene+ts principles.

$lanning programming budgeting system involves

the preparation of a long term corporate plan, which

clearly established the objectives, which the

organi!ation aims to achieve

$lanning programming budgeting system E$$%SF

was +rst introduced in the (SA, when its success was

noticeable in the budget of defense department. The

system is favorable for (SA but not appropriate of

igeria. Dith acute skill shortage, planning

programming and budgeting system generates for

igeria. Dith acute skill shortage, planning

programming and budgeting system generates a lot of

paper work as objectives and goal attainments measure

are described and alternatives e1amined.

Advantages

3. It creates room for co2ordinate pursuit of overallcorporate objective.


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4. It enables the thorough evaluation of the best

means for attaining the various programs

5. It e1poses overlapping ine


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regard to current budget allowance while some

additional amounts are added or deducted as the case

may be for e1pected future increases or decreases in

volumes of activities and prices.

Advantages

3. This techni0ue is easy to understand

4. it is fast

disadvantages

3. It encourages waste, as each budget holder

would want to e1ceed budget. imit is order to

have higher budget allowance in future. This

creates room for budget slacks

4. it is past oriented and so carries with it,

ine


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It has help in the production industry in general

and igerian %reweries $lc, in particular.

a. &ncouraging the management of the organi!ation

to look ahead and plan ahead.

b. /an give early warning of implementing problems,

e.g shortage of cash or give early signals of

business opportunities e.g surplus of cash for a

special purchase of machinery or raw materials.

c. Assist the control of cost by providing a budget

yard stick by which actual cost can be measured.

d. Assist the control of performance, e.g

management of actual sales against budgeted

sales, actual production against budgeted

production.

e. Assist in decision making e.g identifying the

budgeted cost and budgeted revenues of a capital

e1penditure proposal

f. Assist in coordination of functions and business

area, e.g purchasing and stock, production and

sales +nance.

g. To decentrali!e responsibilitiesIt should be noted that budget techni0ues and

budgetary control are not a substitute for good


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CHAPTER THREE

RESEARCH METHODOLOGY

.1 RESEARCH DESIGN

"esearch means to search again, to +nd out more,

to take another more careful look. "esearch is the

scienti+c study of a problem by way of investigation

undertaken in o=er to +nd solution and to increase

knowledge frontier. Aigbokaevobolo and fanson,

E4GG4?5GF

According to Aigbokaevobolo and fanson

E4GG4?5GF research design is de+ned as the strategy,

which indicates how data relating to the research work

should be collected and analy!ed. It is a plan structure

of investigation conceived so as to obtain answers to

research 0uestions. A research design is the blue

printJ that addresses the problems of scienti+c.

achmias * acmias E3K;8?:8F

The research design shows that hypothesis

postulated in this research work, the commonly used

design are?

a. &1ploratory researchb. 'escriptive research.

.2 POPULATION OF THE STUDY


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There are datas collected speci+cally through the

use of 0uestionnaires and personal interview

conducted. The 0uestionnaire design is divided into

parts, section A and section % Section HA

gives an insight of personal background of the

respondent such as name, age, length of service in the

company, educational 0uali+cation etc. This section is

important because it assisted in accessing the

relevance of the information given by respondents.

Section % of the 0uestionnaire is structure to draw

out general information in respect of the system of

budgeting in the organi!ation.

S'-*%+y %+(+

The secondary source of data are collected from

already published materials such as te1tbooks, journals

and company reports e.t.c. Theses were all materials

relating to budgeting.

The primary source of data should supplement

data collected from secondary source in drawing

generali!ations and in searching conclusions based on

the hypothesis..! METHOD OF DATA ANALYSIS


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The data prostration is in tabular form, and

analysis of data techni0ues employed includes)

$ercentage analysis

/hi2s0uare hypothesis testing

The techni0ue used for each analysis was based on

the applicability of such techni0ues on the data

collected.

The percentage analysis will be used to measure

what ratio of sample e1hibits particular features fore1ample

The percentage of se1 distribution

The percentage of marital status distribution

#inally, the use of /hi2s0uare Q14R will adopted, the

14test is an important e1tension of hypothesis testing

and is used to measure the discrepancy e1isting

between observed and e1pected fre0uency.

The formula for calculating of /hi2s0uare Q14R is as

follows)

4 QG32e3R4U QG42e4R

4U VUQGn2enR4

e e eDhere

G The observed fre0uency

& The e1pected fre0uency

/alculated value of chi2s0uare


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And the formula used in the determination of the

degree of freedom is?2 > Qr W 3R Qc W 3R

Dhere

" "ows

/ /olumns

In the research study, the hypothesis is stated in

both null E9GF and alternative form E93F. The hypothesis

using chi2s0uare Q14R will be tested at 3X G.G3 level of

signi+cance.

If the calculated value is greater then the critical

value, the alternative hypothesis 93will be rejected ad

the null 9G will be accepted. 9owever, if calculated

value is les than the critical value, the null hypothesis

will be rejected while alternative E93F will be accepted.


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CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

".1 INTRODUCTIONS

This chapter focuses on data presentation and

analysis using bother descriptive and statistical analysis

'escriptive analysis involves the use of

percentage tables taken in the presentation and

analysis of data which comes up in this chapter, the

researcher will look at certain 0uestions in the

0uestionnaires which are meant to provide relevant

personal data.

"esults on outcome of oral interview conducted

among the sta= of igerian %reweries $lc were also

adopted.

".2 DISTRIBUTION OF @UESTIONNAIRES DESIGN

The analysis and interpretation was solely based

on the useable retrieved 0uestionnaires. A total of

twenty2+ve 0uestionnaires were administered on the

sta= and personal manger of igerian breweries $lc,

the researcher was only able to collect twenty

0uestionnaires from the respondents which represent;GX of collections attained and some not recovered


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which represents 4GX of the 0uestionnaires

administered.

The data below shows the responses of the

respondents to the 0uestion asked in the

0uestionnaires.

Analysis of 0uestionnaires administered and retrieved

@UESTIONNAIRES RESPONSE PERCENTAGEo of 0uestionnaire

received

4G ;G

o of 0uestionnaires notreceived

7 4G

Total 0uestionnaires

administered

47 3GG

#rom the above analysis, it is understood that a

total of twenty2+ve E47F 0uestionnaires were

administered and twenty E4GF received. These

represents ;GX of total administered and where all

useable while +ve E7F represents 4G7 which were not

received.

ANALYSIS OF @UESTION ONE

This table shows the se1

RESPONSES RESPONSE PERCENTAGEMale 34 8G


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#emale ; 6GT-(+ 20 100

#rom the above table, 8GX of the respondents aremale while 6GX are female. This shows that majority of

the sta=s of igerian %reweries $lc are male.

ANALYSIS OF @UESTION TWO

This table shows the age classi+cation of the

respondents

RESPONSES RESPONSE PERCENTAGE4G25G 6 4G5G26G 7 476G27G 8 5G7G and above ! 2!T-(+ 20 100

#rom the above data, it is e1plained that out of

twenty E4GF respondents. nly four E6F comes from

between the age of 4G25G years, +ve E7F between the

ages of 5G26G years, si1 E8F falls between the ages of

6G27G years while +ve E7F comes from between the

ages of 7G and above. This implies that between the

ages of 6G27G years brackets form a better part of the

respondent.

ANALYSIS OF @UESTION THREE

Dhat is your marital statusC


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RESPONSES RESPONSE PERCENTAGESingle 6 4G

Married K 67'ivorced 5 37Didowed 6 4GT-(+ 20 100

#rom the above tale, it is observed that out of the

total respondents, four E6F representing 4GX were

single and nine EKF representing 67X were married,

three E5F representing 37X of the total respondents

were divorced and fourE6F representing 4GX were

widowed. The greatest percentages of the respondent

were married personnel.

ANALYSIS OF @UESTION FOUR

Dhat is you educational 0uali+cationRESPONSES RESPONSE PERCENTAGE

DAS/&NSS/& 6 4G'N/& 5 379'N%S/ 3G 7G$9' and above 5 37T-(+ 20 100

#rom the above data, it revealed that four E6F

representing 4GX of the total respondents have

DAS/&NSS/&. Three E5F representing 37X were from


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'N/&, ten E3GF representing 7GX of the total

respondent have 9'N%.Sc while threeE5F representing

37X of the respondents have $9' and above.

ANALYSIS OF @UESTION FIVE

9ow long have you been working in igeria %reweryC

RESPONSES RESPONSE PERCENTAGE326 years : 57723G years ; 6G3G years and above 7 47T-(+ 20 3GG

#rom the above, it is observe that out of twenty

E4GF numbers of the respondents, seven E:F

representing 57X have the working e1perience 325

years, and 723G years of the respondents have eight E;F

representing 47X have to years and above working

e1perience.

ANALYSIS FOR @UESTION SI

'oes igeria %rewery prepare budgetC

RESPONSES RESPONSE PERCENTAGEBes 3K K7o il 2'ont know 3 7

T-(+ 20 100


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The information above shows that 3K respondents

representing ;GX said yes with the postulation that

igerian %rewery prepares budget, while one E3F

respondent representing 7X said they dont know.

RESPONSES RESPONSE PERCENTAGEBes 4G 4Go il 2'ont know il 2T-(+ 20 100

The data shows that 4G respondent representing 3GGX

said yes, that they like the idea of budgeting.

ANALYSIS OF @UESTION EIGHT

RESPONSES RESPONSE PERCENTAGEStrongly agree 34 8GAgree 6 4G

Strongly disagree il 2'isagree 4 3G(ndecided 4 3GT-(+ 20 100

The above data shows that twelve E34F of the

respondents representing 8GX strongly agree that

budgeting is a motivational factor, and four E6F

representing 4GX are of the opinion that budgeting is a

motivational factor, while two E4F representing 3GX


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disagree with the postulation and two E4F representing

3GX are uncertain whether budgeting and budgetary

control is a motivational factor for employees in the

organi!ation.

ANALYSIS OF @UESTION NINE

%udgets are properly implemented in the company

RESPONSES RESPONSE PERCENTAGEStrongly agree 36 :GAgree 7 47Strongly 'isagree il 2'isagree il 2(ndecided 3 7T-(+ 20 100

The information above shows that fourteen E36F

respondent representing :GX strongly agree that

budgeting is properly implemented, and +ve E7F

respondent representing 47X agree with the

postulation while one E3F respondent representing 7X

are uncertain whether the company implement budget

or not.

ANALYSIS OF @UESTION TEN

The budgets of igerian %rewery are prepared annually

RESPONSES RESPONSE PERCENTAGEStrongly agree 34 8GAgree 8 5G


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Strongly disagree il 2'isagree il 2(ndecided 4 3GT-(+ 20 100

The above data shows that twelve E34F respondent

representing 8GX strongly agree that igerian %rewery

prepare budgets annually while si1 E8F respondent

representing 3GX agree with the postulation and two

E4F representing 3GX are uncertain whether the

company prepares budget annually or not.

ANALYSIS OF @UESTION ELEVEN

%udgeted estimates are compared with actual

performance

RESPONSES RESPONSE PERCENTAGEStrongly agree 35 87

Agree 6 37Strongly disagree il 2'isagree 6 4G(ndecided il 3T-(+ 20 100

#rom the above data. Thirteen E35F respondent

represent 87X strongly agree that budgeted estimates

are compared with actual performance, while three E5F

respondent representing 37X agree with the

postulation and four E6F respondent representing 4GX


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disagree that budget estimate are not compared with

actual performance.

ANALYSIS OF @UESTION TWELVE

'o you have a budget implementation committee in

your companyC

RESPONSES RESPONSE PERCENTAGEBes 35 87o 5 37'ont know 6 4GT-(+ 20 100

The above data shows that 35 respondents

representing 87X said yes, that igerian %rewery has a

budget implementation committee, while E5F

respondent representing 37X said no to the postulation

and E6F representing 4GX said they dont know if

igerian %rewery has a budget implementation

committee.

ANALYSIS OF @UESTION THIRTEEN

%udgeting is an instrument of control in the

organi!ation

RESPONSES RESPONSE PERCENTAGE

Strongly agree 36 :GAgree 7 47Strongly disagree il 2'isagree il 2


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(ndecided 3 7T-(+ 20 100

#rom the above table, fourteen E36F of the respondentsrepresenting :GX strongly agree with the postulation

that budgeting and budgetary control is an instrument

of control in an organi!ation. And +ve E7F respondent

representing 47X agree with it, while I respondent

representing 7X are uncertain.

ANALYSIS OF @UESTION FOURTEEN'oes budgeting play any signi+cant role in allocation of

resourceC

RESPONSES RESPONSE PERCENTAGEBes 3K K7o il 2'ont know 3 7

T-(+ 20 100

The above data shows that 3K representing K7X said

yes, that budgeting plays a signi+cant role in allocation

of resource, while I respondent representing 7X is

indi=erent.

ANALYSIS OF @UESTION FIFTEEN

%udgeting helps to communicate management

intention to employees



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Strongly agree 35 87Agree 7 47Strongly disagree il 2'isagree il 3G

(ndecided 4 7T-(+ 20 100

#rom the information above, 35 respondent

representing 87X strongly agree that budgeting helps

to communicate management intentions to employees)

while 35 representing 87X agree with the postulation

and 4 representing 3GX are uncertain whether

budgeting helps to communication management

intention to employees or not.

ANALYSIS OF @UESTION SITEEN

'oes the previous year budget a=ect the current year

budgetCRESPONSES RESPONSE PERCENTAGE

Bes 5 37o 4 3G'ont know 37 :7T-(+ 20 100

#rom the information above, it shows that 5

respondents representing 37X said yes that previous

year budget a=ected the current year budget while 4


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representing 3GX said to the postulation and 37

representing :7X are indi=erent.

ANALYSIS OF @UESTION SEVENTEEN

Are di=erent branches allowed to prepare their own

budgetC

RESPONSES RESPONSE PERCENTAGEBes ; 6Go 4 37'ont know K 67T-(+ 20 100

The information above shows that ; respondents

representing 6GX said yes that di=erent branches are

allowed to prepare their own budget. And 5

representing 37X said no to the postulation, while K

representing 67X are indi=erent.

ANALYSIS OF @UESTION EIGHTEEN

%udgeting and budgetary control are e=ective guides

which aids an organi!ation in achieving its desire

objective.


Strongly agree 35 87Agree 5 37Strongly disagree il 2'isagree 4 3G


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(ndecided 4 3GT-(+ 20 100

The information above shows that 35 representing37X agree that budgeting and budgeting control are

e=ective guide, which aid an organi!ation in achieving

it desired objectives. 35 representing 87X strongly

agree with the postulation and 4 representing 3GX

disagree with the postulation that budgeting and

budgetary control is not an e=ective guide which aidsan organi!ation in achieving its desired objective while

4 representing 3GX are uncertain about the

postulation.

Analysis of 0uestion nineteen

rgani!ational activities cannot be e=ectively run

through the use of budgeting.

RESPONSES RESPONSE PERCENTAGEStrongly agree 2 2Agree 38 ;GStrongly disagree 2 2'isagree 6 4G(ndecided 2 3GT-(+ 20 100

#rom the information above 38 respondent

representing ;GX strongly agree that organi!ational


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activities cannot be e=ectively run through the use of

budgeting while 6 representing 4GX strongly disagree

with the postulation.

". HYPOTHESIS TESTING AND ANALYSIS

9aving enumerated the hypothesis postulated in

the earlier chapters of this research study, it is the

researchers aim at this point to test for the hypothesis

so as to accept or reject those postulated and outline

the implications of the results. The hypothesis will be

tested collectively.

(sing the chi2s0uare Q14R formular

4 QG32e3R4

e3

Dhere 14 chi2s0uare

G observed fre0uency

e e1pected fre0uency

v k23degree of freedom

The decision rule is accepting 93 Enull hypothesisF if

calculated chi2s0uare is use than the table value of chi2

s0uare.

9ypothesis oneYuestion no eleven states that, budgeted estimate

are compared with actual performance.


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The chi2s0uare E1F will b used in the test of the

hypothesis.

9G? /omparison of actual result against predetermined

estimates is not necessary.

93? /omparison of actual result against predetermined

estimate in necessary.

TESTING WITH CHI S@UARE

4 QG32e3R4

e3

4 QG32e3R4 U QG32e3R4

e3 e3

4 Q35247R4 U Q6U47R4

47 47

Q234R4 U Q243R4

47 47

366 366

47 47

7.:8 U 3:.86

45.6

Decision

Since the computed statistics of 45.6 is greater thanG.GG83, the null hypothesis E9GF is rejected while the

alternative hypothesis is accepted.


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HYPOTHESIS TWO

Yuestion no eighteen states that budgeting and

budgetary control are e=ective guide which aid an

organi!ation in achieving it desired objectives.

The chi2s0uare E14F will be used in the test of the

hypothesis

9G? %udgeting and budgetary control are not e=ective

guides which

aids organi!ation in achieving its desired

objectives.

93? %udgeting and budgetary control are e=ective

guides which

aids organi!ations in achieving its desired

objectives.

The null hypothesis was designed to establish the

fact that budgeting and budgetary control is not an

e=ective guide, which aids an organi!ation in achieving

it desired objective. The alternative hypothesis was to

counter the null hypothesis seeks to establish.budgeting and budgetary control is an e=ective guide


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which helps an organi!ation in achieving its desired

objectives.

To test it statistically chi2s0uare E14F will have the

following)

4 QG32e3R4 U QG32e3R4

e3 e3

where G3 4

G4 38e3 e4 4G

4 Q4 W 4GR4 U Q38 2 4GR4

4G 4G

4 Q23;R4 U Q26R4

4G 4G

546 U 38

4G 4G

38.4 U G.;

3:

The hypothesis is tested at 7X level of signi+cance.

This means that we will assume K7X correct and 7X

erroneous

'egree of freedom Qr W 3R Q4 W 3R


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Dhere r

c7

'egree of freedom Q4 W 3R Z Q7 W 3R

3 Z 6

6

4 degrees of freedom at 7X level of signi+cance

14 7.KKK3 Qtable valueF

The decision rule

Since the completed value of 14 3: and is more than

the table value of 7.KK, we will reject the null

hypothesis E9GF and accept the alternative hypothesis

E93F

/onse0uently, it has been proved from the results

of the hypothesis that budgeting and budgetary control

are e=ective guide which aid an organi!ation in

achieving its desired objectives. This is true because

budgeting involves features +nancial plans of the

businesses as well as checking deviation from the

target and taking corrective measures as appropriate

against advanced variance.

HYPOTHESIS THREE Yuestion number nineteen states that organi!ational

activities cannot be e=ectively run through the use of


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budgeting. The chi2s0uare E14F will be used in the test

of the hypothesis.

9G? rgani!ational activities cannot be e=ectively run

through the use of budgets

93? rgani!ational activities can be e=ectively run

through the use of budgets.

9ere, the chi2s0uare statistic will be used at 7X level of

signi+cance and H3 as degree freedom.

(sing data from table we have

Strongly agreed 38

'isagreed 6

Total 4G

'egree of freedom Qr 2 3R Qe W 3R

Q4 W 3R Q4 W 3R

d. f Q3R Q3R

3

TESTING WITH CHI4S@UARE

4 QG W eR4

QG 2 eR4 U QG 2 eR4

47 47 Q38 W 47R4 U Q6 2 47R4

47 47


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Q WKR4 U Q2 43R4

47 47

48

;3U 663

47 47

5.46 U 3:.86

4G.;;

'egree of freedom is I under 7X level of signi+cance

4 G.GGK8

Decision

Since the computed of 4G.;; is greater than G.GGK8,

the null hypothesis E9GF is rejected. Dhile the

alternative hypothesis E93F is accepted.


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CHAPTER FIVE

SUMMARY OF FINDING, RECOMMENDATIONS AND

CONCLUSIONS

!.1 SUMMARY OF MA#OR FINDINGS

This study reveals 0uiet a number of interesting

facts about the operational mode of budgeting and

budgetary control system in a manufacturing company.

The management of the brewery appreciates the

uni0ue importance of budgeting. This is attested to the

fact that the company allows each department heads to

prepare budgets which is harmoni!ed by the chief

accountant in the company.

The major empirical +ndings of the study are succinctly

described as follows?

3. %udgeting is a motivational factor for

employees in an organi!ation.

4. %udgeting is a good communication tool for

communicating management intension to

employees.

5. /ontrol in the brewery is achieved through

constant monitoring of operations in costbudget centres with variances analy!ed and

reported to management for prompt actions.


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6. %udget administration in the company is run by

the department head, various departmental

heads, and their junior managers organi!e,

discuss and plan the budgets.

7. It was also revealed that the budgetary

committees review the budget. Apart from

planning, every detailed of the companys

operation actual performance are constantly

monitored through budget committee and cost

centers by the use of budget reports where

signi+cant variations e1ist, investigations are

also carried out to +nd the causes so that

corrective actions would be taken.

8. The implementation of budgeting and

budgetary control has attributed to the

company attaining its objectives.

!.2 RECOMMENDATION

The following recommendations will assist the

company in achieving e=ective application of budgeting

in terms of attaining a good pro+t performance.3. The management of the company should have a

permanent budget committee in departments.


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Dhich should also involve the various

department heads of the company.

4. $ast performance should carefully be analy!ed

with a view to knowing the reason targets were

not achieved before and whether such threats

still e1ist.

5. There should be an apparent link between

managerial e


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:. lastly, the introduction of computer system will

also enhance good 0uality information and

ade0uate record at the appropriate time.

!. CONCLUSION

%udgeting and budgetary control system can

assist management in their day to day decision making

and it will also conse0uently, increase productivity

which of cost will be bene+ciary to the organi!ation and

the society at large.

%udgeting and budgetary control helps

manufacturing company to keep focus its pro+t and non

pro+t goals.

It is worth while drawing the attention of

management to the importance of setting reliable and

up to date information about operations of the

company. Also information about customers markets,

competitors and the economy are relevant for budget

formulation.

A closer look at budgeting and budgetary controlsystem of igerian %reweries $lc reveals that the

primary objective of the budgeting is to carefully


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estimate e1penses and income of the organi!ation so

that wastages and ine


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BIBLIOGRAPHY

Abohi, A.A E4GG3F, Management Accounting I [ustice[elo publishers %enin /ity

Adams ".A E4GG4F $ublic sector accounting and +nance5rd&dition /orporate $ublishers >entures

Adeniji, A.A E4GG6F Management Accounting 5rd&ditionvalue Analysis /onsult E$ublishersF agos.

Aigbokhaevbolo, . E4GG4F Management Accounting&jordamen $ublishers %enin /ity.

Aigbokhaevbolo, ..M. and fanson &.[ project workimprint services $ublishers %enin /ity.

Akhalor, $.A. E4GG4F? %usiness $olicy and Strategy Tide$ublishers %enin /ity.

Akhayer >.. E3KKKF %udgeting and budgeting $rocessin the $ublic Sector

%ackground of igerian %reweries $lc 4GG4 Annual"eport and Materials as $resented by the company.

/olin 'rury E4GG4F Management and cost Accounting>an ostrand "einhold E(F co. td $ublisher&ngland.

'rucker .$. E3KKGF The $ractice of Management$ublished by Dilliam 9einenam td.

#agunjade, % E4GG4F The top ten igeria /ompanies byMarket >alue H#inancial Standard April 5, pg 55.


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9ongren /.T. E3KK6F Introduction to ManagementAccounting

ucey, T. E4GG4?33GF Yuantitative Techni0ues Si1th&dition, &ducational low price sponsored te1tsondon.

koye .A.&. E3KK:F /ost Accounting Managementperational Application (nited /ity $ress %enin/ity.

la /.S E3KK4F Management Accounting Theory and

$ractice

luwi -.%. E3KK4F Seventy seven 0uestions andanswers in costing onibnoje $ress $ublishers

wler I.D. [ et al E3KKKF wheldons cost Accounting.Study te1t $& II? Management Accounting.

Bomere .. and Agbonif .A. E3KKKF? researchMethodology (niben $ress %enin.


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@UESTIONNAIRE

Yuestionnaire on the budgeting and budgetary control

in a ma

3. Se1? Male E F

4. Age?4G2 5G E F 5G26G E F 6G27G E F 7G and

above E F

5. Marital status? Single E F Married E F 'ivorced E F

Didowed E F

6. Dhat is your educational 0uali+cationC

DAS/&NSS/& E F

'N/& E F 9'N%.Sc E F

7. 9ow long have you been working with igerian

%reweryC 326 years E F 723G E F 3G years and

above E F

PART B

8. 'oes igerian %rewery prepare budgetC Bes E F

o E F

'ont now E F

:. ' o you like the idea of budgetingC Bes E F o

E F'ont now E F


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;. %udgeting is a motivational factor for employee in

the organi!ation Bes E F o E F 'ont know E F

K. %udgets are properly implemented in the

company. Strongly Agree E F Agree E F Strongly

disagree E F 'isagree E F

(ndecided E F

3G. The budgets of igerian brewery are prepared

annually. Strongly Agree E F Agree E F Strongly

disagree E F

'isagree E F (ndecided E F

33. %udgeted estimate are compare with actual

performance. Strongly Agree E F Agree E F

Strongly disagree E F


34. 'o you have a budget implementation committee

in your companyC Bes E F o E F 'ont know E F

35. %udgeting is an instrument of control in the

organi!ation. Strongly Agree E F Agree E F

Strongly disagree E F


36. 'oes budgeting play any signi+cant role inallocation of resourcesC Bes E F o E F 'ont

know E F


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37. 'oes the previous year budget a=ect the current

year budgetC Bes E F o E F 'ont know E F

38. 'oes the previous year budget a=ect the current

year budgetC Bes E F o E F 'ont know E F

3:. Are di=erent branches allo wed to prepare their

budgetC

Bes E F o E F 'ont know E F

3;. %udgeting and budgetary control are e=ective

guide which aid organi!ations in achieving its

desired objectives. Strongly Agree E F Agree E F

Strongly disagree E F 'isagree E F

(ndecided E F

3K. rgani!ational activities cannot be e=ectively run

through the use of budgeting. Strongly Agree E F

Agree E F Strongly disagree E F 'isagree E F

(ndecided E F


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&do State of Technology

And Management, (sen.

%enin /ity, &do Sate.

'ear SirNMadam"esearch 0uestionnaires on budgeting and

budgetary control in a manufacturing company.

I am a student of the above named department

and school. This 0uestionnaires is designed to facilitate

the gathering of Information in the preparation of a

project which services as re0uirement for the Award of

ational 'iploma in Accountancy.

The research project is aimed at analy!ing and

educating brewery industries on the usefulness of

budgeting and budgetary control in a manufacturing

company. Any information supplied will be printed in

con+dence and for academic purpose only.

Bou anticipation cooperation in completing the

0uestionnaire will be highly appreciated.

Thanks for your co2operation.

Bours faithfully,

Acc Project 3

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