CHAPTER ONE
1.0
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
One
of the basic functions of managers is planning and control. Planning is the
determination of the goals and objectives of an organization and the best why
in which these goals can be accomplished. While controlling includes all the
activities that ensure that the action of the organization towards the stated
goals.
In
order to ensure that the company achieve within the minimum costs the company
will make a projection of its cost and revenue through budget while controlling
the cost of ensuring the corrective actions are taken whenever cost or expenses
been incurred are not of the same with what budgeted means of budgetary
control. Almost every sphere of human or business engagement has come of age
with budgeting.
Government parastatals, banks companies even household
can hardly operate successfully with the aid of budget its vital role for the
attainment of corperate objectives whether short or long term can not be over
emphasized.
T .
Lucey described budget as “ a plan quantified in monetary terms, prepared and
approved prior to defined period of time, usually showing planned income to be
generated and or expenditure to be incurred during the period and the capital
to be employed to obtain a given objectives.
T .
Lucey costing and instruction manual ( Second edition D.P, Publication, Great
Britain (1987) page 346.in the James Vein, budgetary control is defined in the
institute of cost and management accounts in 1996 edition as:
The
establishment of budget relating to the responsible of executives of the
requirement of a policy and the
continuous comparison of actual with budgeted results, either to secure by
individual action, the objectives of that policy to provide a basis for its
revision.
Also
Simeon Ibitoye describes budgetary control as “The process of comparing the
actual result with the planned performance and highlighting variances
therefore, which can then be analyzed by cause and responsibility.
Another
definition by J. Batly in management accounting defines budgetary control as “
A system which uses budgets as a means of
1. FORCED PLANNING:
This involves target setting, problem anticipated and long-term strategies to
short term, it also involves further plans for purposeful direction for goal
attainments.
2. CO-ORDINATION OF DEPARTMENT
ACTIVITIES:- This involves the reduction of sub-optional
decision and information flow, also enhance, articulate utilization or
available resources. It ensures that Jales determines production capacity –
stock purchases, labour and other operation commitment,limiting factor are
collectively tacked or eliminated.
3. IT PROVIDES A FRAMWORK FOR JUDGING
PERFORMANCE:- It involves a plan whereby actual result is
progressively compared with budgeted figures and it ensures that variences be
traced continually. The above are fact of the roles of a budget in an
organization and to ensure an effective budget; committee is established to see
to the overall responsibility for budget preparation and administration. The
chief Executive of the organization with departmental heads or senior managers
is a member of the committee. The committee prepares the budget, review it and
also suggest revision and amendment to the management.
The
researcher work will study the various budget used by Nigeria Bottling Company,
as well as the budgetary control policies. The basic mechanics will be studies
and finding will be made where it deemed necessary.
1.2
STATEMENT OF THE PROBLEMS
The present situation experience in the
country has left the Nigerian Bottling Company to undergo a services of
problems being as a result of the changes in the frame work of today
competitive macro economic environment.
This has compelled the Cocacola Company to
fashion new instrument and services for their market. Procrastination of the
main problem faced with Cocacola Bottling Company is flexible in nature of
government policy on the Nigerian Bottling Company, which lacks continuity.
Another major problem is high level and
state of illiteracy in the country which to a great extent has affected
customers who understands little or non about Bottling Company policies and
incentive created by the companies to develop the general economy of Nigeria.
1.3
AIMS AND OBJECTIVES OF THE STUDY
This research work is aimed of investigation and
identifying the problem facing companies that fails to carry out a good and
effective budgetary control system.
It
seeks to state the following:
1. To
identify the planning and control system
2. To
know the kind of problems that is encountered in carrying out these controls
3. To
identify the use of the principle of responsibility accounting.
4. To
recommend possible solution to these problems that is being encountered.
5. To
look into area where there is variances and the reason for such variance.
6. To
look into areas where possible improvement can be made.
7. To
identify feedback procedures.
1.4
SCOPE OF THE STUDY
The
scope will attempt to find out how budget as a
management tool facilitated planning and controlling, the way by which
the actual performance are compared with the budgeted. Through, there are many
other organization, but Bottling Company has been chosen because of the believe
that it will be good organization from which were are to learn about the use of
budgeting and budgetary control as effective management control tools, the
research work will endevour to look the management of Nigeria Bottling Company
has effectively made use of budgetary system to make meaningful decision that
has improved the overall performance of the company.
1.5
SIGNIFICANCE OF THE STUDY
1. The
study will enable us to stimulate the increasing interest on the part of
accountancy student and also business organization in general.
2. It
will enable us to search into the improvement of budgetary ,control and how
control system can be used as an effective tool for decision making.
3. It
will enable us to know on the uses of budgetary controls and its effect to
production.
4. It
will enable us to offer solution lto those organizations that are facing
problems with their budgetary control
system and also its uses.