Inventory, as a current asset, differs from other current assets because only financial managers are not involved. Rather, all the functional areas finance, marketing, production, and purchasing, are involved. The views concerning the appropriate level of inventory would differ among the different functional areas. The Conflicting view points of the various functional areas regarding the appropriate inventory levels in order to fulfill the overall objective of maximizing the owner s wealth. Thus, inventory management, like the management of other current assets, should be related to the overall objective of the firm. It is basically concerned with inventory management techniques. Attention is given here to basic concepts relevant to the management and control of inventory. The aspects covered are: (i) determination of the type of control required, (ii) the basic economic order quantity, (iii) the recorder point, and (iv) safety stocks. As a matter of fact, the inventory management techniques are a part of production management. Thus it will help the financial managers in planning and budgeting inventory
Planning is the basic managerial function. It helps in determining the course of action to be followed for achieving organizational goals. It is the decision in advance what to do, and when to do, and who will do the particular task? Plan is made to achieve best results. Control in the process of checking whether the plans are being adhered to or not, keeping the record of process, comparing it with the plans and then taking corrective measure for future if there is any devotion. Every business enterprise needs the use of control techniques for surviving in the highly competitive and managing economic world. There are various control devices in use .budget are the most important tool of profit planning and control. They also act as an instrument of coordination.
A budget is a detailed plan of operations for some specific future period. It is an estimated prepared in advance of the future period to which it applies. It acts as a business parameter. It is a complete programme of activities of the business for the period covered.
Objectives behind this Study
Budget and Budgetary control system is a very vast subject. But at the same time it is basic need of every company to make the budget. So it requires the overall knowledge and skill for making budget and without planning nobody can achieve organizational goals. This topic is very essential to every company and it's have special importance in the current competitive world.
Taking into consideration the vast importance of Budget and Budgetary control. The objective behind this study work is as follows:
To study in detail the budget procedure of Mahindra & Mahindra Co. Ltd. Nagpur.
To list of various types of budgets generally Mahindra & Mahindra Co. Ltd. Nagpur prepares.
To evaluate variance analysis of Mahindra & Mahindra Co. Ltd. for taking suitable action by comparing actual results with budgets so that the causes are not repeated and remedial action should be taken in future.
a. Any modern business can t not function without planning which is related to production, sales, stocks, requirement of labour, etc. The advantage of planning is that we can anticipate the problems before hand. Planning through budgetary control is necessary at all levels of management in which there is the process of thinking which enables to provide new idea to the management.
b. A detailed budgetary control system is one where the plans are written down and these plans are circulated to all the levels management this can be achieve only through proper communication.
c. It encourages research and development as budgetary control schedules are usually based on past experience. From the study variances analysis is possible so that corrective action taken wherever necessary.
Objectives of Budgetary Control
Budgetary control is essential for policy planning and control. It also acts as an instrument of co-ordination. The main objectives of budgetary control are as follows.
To ensure the planning for future by setting up various budgets. The requirement and expected performance of the enterprise are anticipated.
To co-ordinate the activities of different departments.
To operated the cost centers and department with the efficiency and expected.
Elimination of waste and increasing profitability.
To anticipate capital expenditures for future.
To centralize the cost system
Correction of deviation from establish standard.
Fixation of responsibility of various individuals in the organization.