Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Management (BBM)
Course Description
:This course contains conceptual and theoretical foundation of budgeting: profit planning and control. It also comprises the functional budgets i.e. sales plan, production plan , purchase plan, overhead budget, labour cost budget , cost volume profit analysis, zero based budgeting and flexible budgeting under different levels of activities.
Course Objective
:This course aims to provide the budgeting systems and their applications, practical and conceptual issues of general budgeting and profit planning position and performance appraisal of business enterprises including financial institutions. It also aims to provide important information to the managers for budgeting purpose and how the organizations are able to generate profit and reduction of costs. Course Description This course contains conceptual and theoretical foundation of budgeting: profit planning and control. It also comprises the functional budgets i.e. sales plan, production plan , purchase plan, overhead budget, labour cost budget , cost volume profit analysis, zero based budgeting and flexible budgeting under different levels of activities.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Conceptual Foundation
- Concept and p urpose of budgeting and profit planning and control, essentials of profit planning, Profit planning and control process, Behavioral implications of a PPC program, Application of p rofit planning and c ontrol in manufacturing and non -manufacturing organizations.
Unit 2. Planning and Control of Sales
- Concept and p urpose of sales p lanning, Factors consideration in sales p lanning, Sales budgeting vs. sales f orecasting, Long range and short range sales p lan, Development of comprehensive sales plan, Components of comprehensive sales plan, Planning sales in a non-manufacturing and manufacturing company.
Unit 3. Production Planning and Control of Manufacturing Concern
- Concept and purpose of production planning, Area of production planning, Responsibility for production p lanning, Factors consideration in production p lanning, Production budget, Production policies, Computation of inventory.
Unit 4. Planning and Control of Materials Purchase & Usage
- Concept and purposes, Raw m aterial consumption budget, Raw materials purchase budget, Material c ontrol, Essentials of m aterial control, Material i nventory policy, Performance report
Unit 5. Planning and Control of Non-Manufacturing Organization
- Concept and purpose, Merchandise budget, Planning inventory levels, Mark-ups and cost multipliers used in retail companies, Open-to-buy planning.
Unit 6. Planning and Control of Direct Labour
- Meaning and objectives, Process of direct labour p lanning, Sources of standard labour hour, Direct labour cost budget, Control of direct labour cost, Performance report.
Unit 7. Planning and Controlling Overhead Cost
- Meaning and types of c osts, Cost behaviors, Controllable and non-controllable expenses, Cost reduction and cost c ontrol, Planning and controlling of m anufacturing expenses, Planning of distribution (selling) expenses, Planning administrative expenses, Preparation of overhead cost budget.
Unit 8. Planning and Control of Cash
- Concept and objectives of cash p lanning, Approaches to develop cash budgeting/planning, Techniques and methods for improving cash p osition, Control of cash positions.
Unit 9. Completion of Profit Plan
- Concept, Planned cost of goods m anufactured, Planned cost of goods s old, Planned cash collection and d isbursement, Planned Income Statement, Planned Balance Sheet , Zero base budgeting: Meaning and importance of Zero base budgeting (ZBB
Unit 10. Use of Cost Volume Profit Analysis in Profit Planning
- Concept and objectives of cost volume profit a nalysis
- Concept, application and assumptions b reak even a nalysis, Special problems in cost volume p rofit analysis, Economic characteristic of breakeven analysis, Calculation of BEP of single and multiple products.
Suggested Readings:
Welsch, G. A., Ronald, W, H., & Paul, N. G., (2013), Budgeting: Profit Planning and Control, New Delhi: Prentice Hall of India. Horngren, C. S., Sundem. G. L., Stratton, W.O., Burgstahler & Schatzberg, J., (2019). Introduction to Management Accounting, New Delhi: Pearson. Garrison, R. H., Brewer, P. C., & Noreen, E. W. (2017). Managerial Accounting, McGraw-Hill Companies, Inc.