Material Budget: Objectives, Importance, and Purposes Explained
Learn about the meaning of material budget, its objectives, importance, and purposes in business planning and control. Discover how material budgeting helps in financial requirements, controlling consumption, maintaining production schedules, and improving budget estimates.
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Presentation Transcript
Welcome to all for the PSK Online lecture By Mr. Dhiraj Ovhal HOD of Commerce
Q.3 :-Meaning of Material Budget and explain Objectives/Importance/purposes of material budget Meaning:- Budget is derived from French word "baguette" which means a leather pouch contains a fund to meet the expenses. It is quantitative numerical statement expressing plan, polices, goals of the enterprises for a definite period.
Page no 11 and 12 as per the notes Objectives/Importance/purposes of material budget Help to plan and control Help to financial requirement Help for controlling material consumption help to maintain production schedule Useful to material control within department Way to suggest improvement in next budget estimate evaluate performance of material
1.Help to plan and control Material Budgeting, as a control tool, provides an action plan to ensure that the organization's actual activities are least deviated from the planned activities. ... Budgets are also forecast tools and make the organization better prepared to adapt to changes in the environment to acquire right material for the production.
2. Help to financial requirement :- Materials budget calculates the materials that must be purchased, for the production and the right time period, in order to fulfill the requirements of the material budget.
3. Help for controlling material consumption :- to give instructions or directions to ensure maintaining adequate quality and quantity of materials for uninterrupted production process with the objective of minimizing material cost per unit. To control and produce material as per the requirement only.
4. Help to maintain production schedule :- , The materials budget calculates the materials that must be purchased, by right time period, in order to fulfill the requirements of the production budget. .. . In a business that sells products, this budget may contain a majority of all costs incurred by the company, and so should be compiled with considerable care of Production schedule.
5. Useful to material control within department:- Materials control eliminates wastage in use of raw materials and supplies in course of purchase, storage, handling and use. It ensures uninterrupted flow of right quality and quantity of materials to the production department. It is creating coordination among the various depatment
6. Way to suggest improvement in next budget estimate:- With the help of Material Budget we can control your finances ensure you can continue to fund your current commitments enable you to make confident financial decisions and meet your objectives ensure you have enough money for your future projects
7. Evaluate performance of material:- Budgets can be used to evaluate the number of units produced or services rendered and the labor hours and materials it took for each process of production. The process involves allocating resources to various compartments within the budget, then going back after the work is complete and comparing budgeted resources with actual usage.
Objectives/Importance/purposes of material budget Help to plan and control Help to financial requirement Help for controlling material consumption help to maintain production schedule Useful to material control within department Way to suggest improvement in next budget estimate evaluate performance of material
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