Budget And Budgetary Control As A Means Of Achieving Organizational Objectives



A budget is designed to express forecast of revenue and expenditures for the ensuring fiscal year, which may correspond to the calendar year with exemption of primitive economics. The budget is the key instrument for the expression and execution of policies, principles, procedures, plans and objectives of management in quantitative and monetary values. Management of an enterprises is efficient if, it is able to accomplish the objectives of the enterprise and it is effective when it accomplishes the objectives with minimum effort.

After planning and setting of designed goals which in essence means making a project in the form of predetermined statement of managerial policy during a given period that provides a standard for comparison with actual results to achieve an organizational objective. There is need to monitor the progress of the company towards these goals. In controlling, managers measure their firm’s performance against established objectives, determine the cause of deviation and take corrective action where necessary. Without budgets, controlling would lack a plan against which to measure performance and as such the companies organizational objectives would not be attained.

Horngren and foster (1999), defined a budget as “a quantitative expression of a plan of action and an aid to co-ordination and implementation”. Also, Warren and fess (1998) defined budgeting as “formal written statement of management plans for the future expressed in financial terms.

Almost everyone uses some form of budgeting to handle personal finances, whether it be a written plan for how much to spend on rent, food, clothing, entertainment, travel etc. In order to control this expenditure, they normally set limits on how much they will spend on each item. As they incur the actual expenditure, they make comparison with the budgeted estimate. Both the public and private enterprises use the budget and budgetary control system. The private enterprise, which are profit oriented are aimed among others at maximum profit achievable which forms the core objectives of the financial aim of the enterprises.

An organization must plan in order to decide what line of action to pursue in a future time period and effective ways of bringing it about. Planning is vital to the success of an organization because when formulated, it leads to making critical appraisal of existing condition and gives the business a sense of direction. Thus, we can say that a plan which is prepared to show how resource will be acquired and used over a period of time is known as budgeting. Its use to control activities is known a budgetary control. A budget draws the course of future action; thus it aids management in fulfilling its planning function. Managers set different goals for their business but a common goal for almost every business are a planned profit. To ensure that its goals is attained, a firm must set limits on what is to be spend and what is to be considered acceptable operating performances. The limits are set forth in a master budget ad compared with the actual result as the year progresses. Without budget such find that its cost have exceeded acceptable level. This brings about the budgetary control system.

The budgetary control system is a system where the act plans or goals to achieve an organization objective is monitored and actions are taken to improve performance or reverse goals which becomes unrealistic. According to Hussey, R (2000) the budgetary control system “is the setting of plans (or budget) which lay down policies for which managers are responsible”. Howard and Brown (1998) sees budgetary control as a “system of controlling cost which includes the preparation of budgets, coordinating the department and establishing responsibilities, comparing actual performance with budgeted and acting upon result to achieve maximum profitability”.

The process of budgetary entails the following:

Determining the company’s objective
Preparing preliminary forecasts
Considering alternative plans and selecting the optimum
Preparing and examining the functional budget
Summarizing budget into master budget
Comparing actual results with budget.
Calculating the variance and analysis the resources for their occurrence.
Taking corrective action to remedy the situation.
The budgeting process serves several purposes firstly; it provides a financial blue print that enables a firm to coordinate all its activities. Using budgets, manager can project outcome and adjust strategies where they are needed before operations begins, thus avoiding costly errors.

Also, the budgeting process forces the managers to re-examine past performances, which may enable them to discover and correct inefficient outmoded method and operations.

In addition, budget enables manager to implement the planning and control functions some organization see the preparation formal budget as time consuming and expensive but, the cost of not budgeting may be far greater and many ultimately lead to the company’s failure. As a guard against total failures in and organization, adequate planning to reduce uncertainty about the future must be the watch wood. The planning process of an enterprise would involve four fundamental procedures:

Establishing the objectives
Determining the short-range objective
Developing strategies
Formulating profit plan or budget.
Using a budget and budgetary control system for frequent comparison between planned and actual performance, a firm is able to isolate deviations from the budget soon after their occurrence and take appropriate corrective action.

This study is therefore intended to examine the efficiency of budgeting as a means of achieving the financial objective of an organization.



The essence of budget and budgetary control is comparison of performance against plan or target. The implementation of plan without well designed budget and budgetary control system is a waste of time. In other to achieve and ensure efficiency there is need to plan and maintain effective and efficient budgeting control system. Such planning and control needs to be coordinated as a result of scarcity of resource and the need to achieve profitability. The following problems will therefore to critically examine in the study.

To find out whether there is any relationship between the estimated figure and the actual.
To find out whether budgeting can help in achieving the organizational objectives
To find out whether budgeting can help in effective planning and control of the financial activities of an organization.
To find out whether budgeting can help in effective communication and performance evaluation.
To find out whether budgeting can guide against resources wastage and how it helps it reduce cost and measure profit earnings.
And finally, to find out if there are any problems associated with budgeting in the company or organization i.e. the limiting factor of the company’s budget.
For management to achieve the firm’s objectives or organizational goals, it is charged with responsibility of planning, controlling and coordinating activities. Other objectives of the organization may include:

The profitability of the organization
The welfare of management and employees.
Reduction of risk
Growth and social responsibility
Therefore, the research will enable us to focus attention on the following areas.

To review the system of budgeting operating in an organization.
Show that budgeting helps to regulate inflow and outflow of the organization fund.
Examine the effectiveness of its budgeting system
Identify budget variance reports as an important guide to profit forecast
Identify the procedure for formulating, preparing and evaluating budget.
Verify that budget and budgetary control acts as device for measuring performance and acts as means of control and motivating employees.
To reveal any weaknesses in budget and budgetary control.
To draw conclusions and make more useful recommendation on how the system can be improved upon.
The following questions formulated in the course of this work.
(a) Is there a positive relationship between budgeted estimates and the actual?

(b) Has budgeting help in effective planning and control of the financial activities of an organization?

(c) Will budget help in effective communication and performance evaluation?

(d) Finally, does budgeting assist an organization in achieving financial objective?


The following hypothesis formulated will be tested in the course of this research.

Ho: represents the null hypothesis, that is the hypothesis which stands and is accepted as true.

Hi: represents the alternate hypothesis, that is, the hypothesis is not true and acceptable.

(a) Ho – That there is a positive relationship between budgeted estimates and the actual

Hi: – That there is no positive relationship between budgeted estimates and the actual.

(b) Ho – That budgeting helps in effective planning and control of the financial activities in an organization.

Hi – Budgeting does not help in effective planning and control of the financial activities in an organization.

(c) Ho – Budgeting helps in effective communication and performance evaluation

Hi – That budgeting does not help in effective and performance evaluation.

(d) Ho – That budgeting assist an organization in achieving financial objective

Hi – Budgeting does not assist and organization in achieving financial objectives


This research is limited to Ranccor food and packaging Nig. Ltd. This study is essentially intended to access the system of budget and budgetary control as a tool in achieving organization objectives. In the course of this research, the researcher intends to look at the efficiency of budgeting that can improve the economic, social performance and profit in an organization

The study will focus its attention on fixed and flexible budgets, incremental budget, zero based budgets. Production and administrative budget, sale budget as well as the master budget; The period for 2000-2004. Consequently, the scope encompasses the following

A review of budget and budgetary control system.
The nature of the master budget.
Types of budget system
To examine the variance between budget and actual result obtained and attempt to identify the cause of the variance.
This research will help us to ascertain how budget and budgetary control can assist management in achieving the financial objective of a company. It will enable the organization to know whether existing budgetary control system is in line with laid down rules and procedures. It will help management in assessing their performance in profit, planning and control. This study will help management plan and set attainable measurable organizational goals and put into motion machinery that will make sure these goals are attained. The organization will see at a glance resources that will be acquired and assessed over a period of time. It will also help to measure improvement in the future.

The general public will benefit from this research work because they will now be able to assess the performance of management and the profitability of the firm. Staff will also benefit from budget because they will know what goals the firm has set and strive towards achieving such goals.

This research will lay emphasis on the importance of budget and budgetary control and planning in Ranccor food and packaging Nig. Ltd. and thus will assist future researchers in this area. It will highlight way of maximizing profit through efficient use of budget. The result from this work will enable the management and board of directors to know the problems associated with budgeting and to proffer solution to it.

Finally, the research will cause


This research will lay  emphasis  on the importance of budgeting, and budgetary control and planning in Ranccor food and packaging Nig. Ltd and thus will assist future researchers in this area. It will highlight way of maximizing profit through efficient use of budget. The result from this work will enable the management and board of directors to know the problems associated with budgeting an to proffer solution to it.

Finally, the research will cause achievable objective to be introduced in the profit and economic plan.


The research work is certainly not without flaws due to the fact that one cannot claim to be an embodiment of knowledge in this field therefore perfection cannot be guaranteed.

The first and foremost important factor militating against the research is the problem of combining the research with other academic work. Besides, the tike the researcher had to complete the study was very short.

Another factor that hampered this research work was finance. Funds were not adequate to our chase some material, to cover traveling expenses. As a result of this, the researcher could not study a large number of the department.

The attitude of the respondent was another problem encountered by the researcher. And because to be sensitive nature of this study, management, staff and personnel were reluctant to give adequate information regarding their departmental budget.


BUDGET:- A plan quantified in monetary terms prepared and approved prior to a define 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 attain a given objective.

BUDGETARY CONTROL:- The establishment of budget relating the responsibility of executives to the requirement of a policy, and the continuous comparison of actual with budgeted result either to secure by individual actions the objective of that policy or to provide a basic for its revision.

PLANNING:- Is the design of a desired future state of an entity and of the effective way of bringing it about.

OBJECTIVE:- The existence of procedure for mobilizing and coordinating the effort of various usually specialized sub groups in the pursuit of joint objective




Orjih .J. (2001),   Financial Management;  Enugu        Splashmedia organization


Welsch et al (2002),  Budgeting profit, planning and control      (5th Ed.) New Delhi, prentice hall of       India.

Lecture notes on Budgeting in Public and private sector.


The Nigerian Accountant Journal, April / June: Volum 3, No 2, PP 28-36.




In this chapter effort would be made by the researcher to review relevant literature and contributions made by various researchers in the area of budgeting and budgetary control.

A budget is a quantitative plan of action prepared in advance for the period to which it relates. Budget may be prepared for the business as a whole, for departments, for functions such as sales and production or for financial and resource items such as cash, capital expenditure manpower purchase etc.

It is well recognized that an enterprises should be managed effectively and efficiently. This should be done by means of controlling and coordination activities of the organization in order to achieve its stated objectives. The process of management is enhanced when management is able to predetermine its course of action in advance. The function of management is basically centered on decision making which is facilitated by various management techniques, procedure and by utilizing the individual and group efforts in a coordinate and rational way. The statement approach to attaining effective management performance is budgeting. Budgeting therefore, is the process of preparing and using budget to achieve management objectives.

According to the Institute of Cost of Management Accountants (ICMA), budgeting is “a plan quantified in monetary term prepared and  approved prior to a defined period of time usually showing the planned income to be generated and for / or expenditure to be incurred during that period and the capital to be employed to attain a given objective”.

There can be not control without objective and plan as this predetermine and specify the desirable behaviour and set out the procedure which should be followed by members of the organization to ensure the firm is operated in desired manners. Historically, budget controls were used as a device to control expenditures in relation to the revenue so the whole array of budgeting control systems in an organization normally provide target to be pursued, means for the revision of the budget in the light of difference in result between in the actual and expected performance.

While a budget is an action plan and budgeting is the process of preparing an action plan, budgetary control is a management techniques use to plan, execute and control operation and activities aimed at achieving set target within a stipulated time frame budgetary control involved the following steps:


Preparation of a budget or a detail action plan.
Identification of responsibility centre in the organization to execute or carry out specific activities forming part of the action plan.
Adaptation of mutually agreed target of achievements to serve as other indication of progress in the action plan, both in financial and physical terms.
A system for periodical monitoring of performance of every segment or responsibility centre involved.
Careful comparison of the actual performance and outcome with the corresponding part of the plan.
Assessment of deviation and variance in actual performance and activities in relation to the plan and identification of such deviation.
Initiation of corrective action aimed at ensuring that the planned activities and action are adhere to as far as possible.
It become obvious for the above description of the term budgetary control that is technique encompassing the entire process starting for preparation of the budget or action plan covering, monitoring and reviewing and culminating in corrective action. Its main purpose is to enable management to plan, carry out, project operations or activities with efficiency and effectiveness in the use of resources.

Drucker (2000) distinguished between ‘Control’ and ‘Controls’. “Control is the function which makes sure that actual work is done to fulfill the original intention and controls are used to provide information to assist in determining the control action to be taken”.

Controls encompasses all the methods and procedure which direct employee towards achieving the organizational objective. Control I whatever direction is not only achieved by formal means but also that pressure exerted by individual over one another. Also, Drury (1987) defined budgetary control as “the process of ensuring that firm’s activities confirm to its plan and that its objectives are achieved”.

The budgeting process is required to achieve different purposes within an organization. In addition to aiding planning, coordinating and communication activities of an organization, they also used as controlling and motivating devices.

The purpose served by the budgeting process include?

It provides a financial blue print that enables a firm coordinate all its activities.
It forces managers to re-examine past performance, which may enable them discover and correct inefficient out model methods and operation.
The budget enables managers to implement the planning and control functions i.e. to state the firm’s expectations in clear formal terms, to avoid confusion and to facilitate their attainability.
It provides a means of measuring and controlling the performance of individual and units and to supply information of the basic of which the necessary corrective action can be taken.
Finally, it communicates expectation to all concern with the management of the firm so that they are understood, supported and implemented.
Budgeting is essentially concerned with:

Establishing a plan of performance which coordinates all the activities of the business.
Recording the actual performance
Comparing the actual with planned performance
Calculating differences and analyzing the reasons for them.
Acting immediately if necessary to remedy the situation.
In a height budget, maximum revenues and minimum costs are combined to produce an idea budget. While this type of budget would be theoretically be achieved, the also not allow for the human factors that normally prevents the achievement attainable. For this reason such a budget is not considered an effective device for motivating employees.

The desired goals should be in budget that is fair to both the firm and its employees. A certain amount of cost efficiency due to human factor such as illness, personal disability should be built into the budgeting process. A budget that is reasonable to both employees and the firm can operate as an effective control mechanism that reward exemplary performance and identifies mediocre performance.

The preparation of the budget should originate at the, lowest level, of management and be refined and coordinated at higher levels.

This approach will enable managers, to participate in preparation of their budget and increase the probability that they will accept the budget and strive to achieve the budget target. The first step towards preparing a reliable budget is to have a sound organizational structure. This involves creating responsibility centre with duties and authorities spelt out. Each responsibility centre must have its own budget showing the costs that are controllable by managers of the department.


In large organizations, budget preparation is normally the responsibility of a budget committee with the chief executives as the chairman. Membership of the committee should be made up of preventative of the major departments of the organization with s senior member of the finance staff acting as the budget officer. When the committee formulates the general programme for the preparation of the budget, the budget officer (who will be responsible for operating the system) will

(a) Issue instruction to various departments to prepare their estimates.

(b) Provide historical information to departmental officers to them in their forecasting.

(c) Reserve and check estimates of the department

(d) Suggest possible revisions

(e) Discuss difficulties with the officers

(f) Ensure that officers prepare their budget in time

(g) Prepare budget summaries

(h) Submit summaries to the committee and coordinate all budget works.


Effective budgetary requires data input from each department. The chief financial officer is often responsible for organizing and administering the budget programs. He ensures that the committee receives all appropriate budget estimates, and that each estimate is raised according to any additional information obtained by the committee.

Selecting budget policies compatible with organizational goals and objectives.
Reviewing budget estimates submitted by section heads.
Revising the budget estimates when necessary
Approving budget estimates
Analyzing budget report and recommending changes.

No specific period of time can be formulated as being the best budgeting period. A detailed budget for each responsibility centre is normalizing prepared for one year. The annual budget may be divided into 12 it may be broken into months. The budget period depends on the type of business concerned. Most organization prepares budget once a year covering the coming fiscal year.

Finally, the purpose for which a budget is established has a major bearing upon the length of the budgets period, and there is nothing to prevent a concern from choosing different period for different purpose.


The master budget comprises of all other departmental and sectional budget. It is referred to as a complete and comprehensive budget packaged which incorporated several budget for a specific period of time. It includes the operating, programme and responsibility budget.

Horgern and suran (1997) defines “a master budget as all segments of an organization. On the other hand, Garrison (1996) defines the masters budget as “a summary of all phrase of a company’s plan and financing activities and generally culminates in profit statement of each position, expression of management plans for the future and horo those plan are to be accomplished.

The master budget encompasses:

(a) Budgeted balance sheet (projected balance sheet).

(b) The budgeted income (projected profit and loss statement).


The functional budgets of an organization include the followings.

1. Production budget

2. Sales Budget

3. Cash budget

4. Purchasing and labour schedule budget

5. Product cost budget

6. Plant utilization budget

7. Capital expenditure budget.

Functional budget is one, which relates to any of the functions of an organization. It is also a subsidiary of master budget.


The cash budget consists of the estimates of cash receipts and payments arising from the planned levels of activities and use of sources, which are considered in various budgets.



As the name implies, this is the cost of selling and distributing the quantity shows in the sales budget. The sales managers and the advertising manager will prepare this budget.


This is the kind of budget that can be automatically geared to change on the level of activity of volume. It is prepared for a range other a single level of activities.


A budget is said to be fixed when it is not adjusted to the volume of the output or level of activity, attained in the period which would be probably different from the level of activity originally planned. This means that a change in the level of activity will required a new budget.


It is vital to make the distinction between budget for current and capital expenditure with the former a sufficient budget must be allocated which allows for the efficient operation of a department at its anticipated level of operation for the coming year. There is a tendency when proposing a departmental budget to take the amount that was spent in the present year and to increase it in line with inflation.

The department manager should carefully cut their spending requirements to meet the target they have set by the overall cooperate plan. This required foresights to avoid as over estimation on the course involved, which will mean that other departments may be left with insufficient finance to operate efficiently conversely, an underestimation can result in departmental staff feeding ie they have not been given enough finance to carry out their job adequately.


As budgeting is becoming increasing complex with the growth of business. Many approaches have been developed for preparing budgets.

These approaches are:

1. Zero – Based Budgeting (ZBB):- This start with a base of zero, then each program and its cost are then ranked starting with the one that is most vital to the organization. In this manner, managers can choose to find programme on the basis of merit, without preconceived notions about what must be included.

2. Increment Approaches:- When incremental approaches are used in an organization, the previous budget of the organization are accepted as a base and those figures either increase or decrease depending on whether the organization wishes to increase or decrease its output during the coming period

3. The Planning Program Budgeting System (PPBS):-

This is a systematic application of programme in the analysis of alternative for a rational decision making and in the allocation of resources to accomplish stated goals over a designated period of time. The analysis over a designated period of time. The analysis focused the attention on the outputs rather than the inputs.

4. Project Evaluation and Review Techniques/Critical Past Methods (PERT/CPM):-

This method takes a look at budgeting problems from the stand point of time. It attempts to determine the longest time duration for the completion of an entire project cost are then assigned to these time and activities thereby providing total financial planning and control by functional responsibility.

5. Probabilistic Budget Method:- Budget under this method are developed based on consumption as the most likely performance in the succeeding period and past experience. It is based on subjective judgment. Statistical techniques could be applied to expected values and ranges including standard deviation for the various budget elements.


The objective of budgeting control are:

(i) Planning:- The setting of plan is a complex time consuming and difficult activity. It is essential that management carries out this first, and a formal system of budgeting control ensures that they do so in a systematic and logical faction.

(ii) Coordination:- By setting plans, the activities of various function of the business can be coordinated.

(iii) Communication:- As individual manager are given the responsibility to achieving the plan. They must be informed on the policies of the organization, give instructions to the subordinate and accepts feedback from them.

(iv) Motivation:- By setting clear targets and communicating them to employees. Motivation may be improved. An organization, which has no sense of direction, will find it difficult to motivate employees.

(v) Control:- Rigorous control can be implemented only by setting a plan of what is intended to be achieved in a defined period of time and regularly monitoring progress this plan with, corrective action being taken necessary.


Budgeting control is a system of controlling cost which includes the preparation of budget, coordinating the departments and establishing responsibilities comparing actual performance with that budgeted and acting upon results to achieve maximum profitably.



According to Engler C, variance analysis is the investigation of the factor, which causes the difference between the budgeted and actual result. It is important those variances are analyses into their constituent parts so that sufficient information is provided for a proper management investigation. Favourable variances are those that have an impact of reducing the predetermined profit.

In general, budgets are used to assist management to fulfill the basic management functions of planning, organizing, directing and control. Some of these advantages include:-

(a) By formalizing the responsibilities of planning budgeting compels managers to think ahead anticipate and prepare for changing conditions in their organization. This enables management to study early its problems consequently afford the opportunity to appraise it systematically in every facet of the organization

(b) Budgeting aids managers in coordinating their efforts so that the objectives of the organization as a whole can harmonize with the objective of its past.

(c) It provides definite expectations that are best framework for judging subsequent performance.

(d) Also, it helps management to focus attention on significant matters through budgeted reports.

(e) Finally, budgeting measures efficiency, which permits management’s self – evaluation and indicates the progress in attaining the enterprise objectives.


Against the afore-mentioned advantages budgeting, there are also its advantages of budgeting, there are also the limitations.

Some of these limitations include:-

People in an organization see budgets and the standard they set as militating against the contingent use of initiative.
Some budgets are not realistic and as such will lower the moral and the productivity of the workers. It may also be used as a pressure device.
A skill fully prepared budget will not in itself improve the management of an enterprise unless it is properly implemented.
Some budgets take time to prepare and install and some times top management expects it too soon, so there is problem of patience.
Finally, the purpose of budgeting will be defeated if the set goals conflict with the organizational objectives.
Since budgeting is not exact science, its success depends on the precision of estimates.

It is possible to implement a system of budgetary in an organization. To ensure that budgeting controls is properly implemented. A commercial sense and a knowledge of the particular company are required so that. It may provide the following advantages.

The resources of the company are given the fullest and most economic use.
All the various functions within the organization are coordinated.
Capital and effort are channeled into the most profitable use
The control system embraces every activity of the company.
Policies can be periodically examined in the light of changing circumstance, and restated if necessary.
Finally, motivation of the entire management terms is assured with clearly defined goals and a method of monitoring achievement.
Although budgeting can offer many advantages, there are difficulties and pitfalls connected with it operations and these includes:-

The process of budgetary control is time consuming and managers may believe that time could be better spent getting on with the job.
Variance can arise through unrealistic plans and changed circumstances, and the reporting of such variance can de-motivate managers.
Planning is not an exact science, and although forecasting technique such as time series analysis and exponential smoothing may assist, the problems should not be overlooked.
Finally, top management must be committed to the system and the budgets for the period or there will be no sense of motivations or cooperation at the other management levels.



Orjih .J. (2001),   Financial Management Enugu Splash       media Organization.

Horngren, CT (1999),   Introduction to managerial Accounting.      New Jersey Prentice Hall International.

Engler C. (2000),   Management Accounting. Home Wood      Illinois. The Guernsey press.


Nwankwo G. (2000),  The Nigerian Financial System Aba 66      Bob Billion Publishers.


A workshop on planning and control procedure in the public sector.





This chapter on research methodology seeks the explain the general research strategy employed in carrying out this study.

In carrying out this research, the choice of program that guides the research work in process of data collection, analysis and interpretation depends on the approach that best provides answers to the research questions.

Population according to Chisnall P.M. (2000) is any group of people or object which forms the object of study in a particular survey.

The population of this study is a census of all subjects that has the knowledge of the phenomenon being studied.

Sampling can be defined as a representative of the population from which they are drawn, so that ready conclusion about the population can be made. In this study, the sample in the organization include units and departmental heads involved in the budget formulation and its preparation.

There are two principle approaches used in collecting data. These are.

Primary data
Secondary data

The primary data collected includes the administration of structured questioners and oral interviews. The questionnaires were designed to obtain information from the respondents in order to facilitate the work and reduce the amount of time the respondent. Would spend with the researcher most of their questionnaire elate Yes or No response while the other were open ended.

Another source of primary data use was oral interview. This served as a supportive source of information to the questionnaire as the question asked were meant to clarify the answers given in the questionnaires.


These were obtained from text books, journals and previous write-up on similar topics.

The data collected will be processed and analyzed using the following techniques.

Descriptive analysis
Percentage analysis
Statistical method
Detailed description of data collected through after the primary and secondary will be made to enable clear understanding of the research.


This is mostly used when the need to determine the frequency which an event occur.

3.4b PERCENTAGE ANALYSIS:- This was used to compare the relationship between variables.

3.4c Tables are used to convey findings in the tabular form for easy understanding, interpretations and comparison.


The chi-square test or method was employed.

This would be used in checking the hypothesis.

The chi-square measures the difference between the expected and observed frequencies.

The computation is arrived at as follows

X2 (O-S)2

Where X2 = Calculated value of Chi-square

O = Observed frequency

S = Expected frequency

The degree of freedom is given as

V = (r-1) (c-1)

r = number of rows

c = number of colum

The researcher employed 5% (0.05) level of significance.


Accept the null hypothesis (Ho) If the calculated Ch-square value is less than the table values reject the null hypothesis and accept the alternative hypothesis of the calculated chi-square value is greater than the table values of chi-square.





This chapter deals with the analysis, interpretation and presentation of data collected through the questionnaires.


A total of 25 questionnaires were prepared and administered to the staff of rancor food and packaging Nig. Ltd. 20 Questionnaire were successfully completed and returned.

Table 4.1 Report of Return

No of questionnaires distributed
No completed and returned
% of completed questionnaires
The methods adopted in the analysis are:-

1. Descriptive

2. Use of chi-square

3. Use of the pie chart


In your opinion do budget and budgetary control system serve as a tool in the attainment of your company’s objective?

Yes (    ) No (   )



No of respondents
% of respondent
From the above table, all the respondent affirm that budget and budgetary control system serve as a tool in attainment of their company’s objective. This represents 100%.


Does the company’s budget originated from the lowest level of management? Yes (    ) No (    )

No of respondents
% of respondent
From the table above, 12 respondents affirmed that the company’s budget originates from the lowest level of management. This represent 60% while 8 respondents disagreed that the company’s budget originates from the lowest level of management representing 40%



Has your company ever achieved it budget estimate at the end of a defined budget period.

Yes (    ) No (   )


No of respondents
No of respondent in degree



Representing table 4.4 in a pie       chart




Is there any relationship between performance evaluation and budget attainment in you organization?

Yes (    ) No (    )

No of respondents
No of respondent in degree




Representing table 4.5 in a        pie chart


Are budgetary control reports prepared in your company?

Yes (   ) No (    )

No of respondents
No of respondent in degree

Indifference        representing 4.6 in a pie        chart.



Do you think you will be motivated if you are more involved in budget preparation than at present?

Table 4.7

No of respondents
No of respondent in degree


Representing table 4.7 in a Pie         Chart


Null hypothesis Ho: Budgeting helps in effective planning and control of the financial activities of an organization.

Alternatives hypothesis Hi: Budgeting does not help in effective planning and control of the financial activities of an organization.

Observed frequency
Expected frequency
From the table 4.8 above, the data collected from the observed and expected frequency will be tested using chi-square X2 test

X2 = å (O-E)2 + å (O-E)2
E1                 E2


Where: O = observed frequency

E = Expected frequency


X2 = (15-13)2 + (5-13)2

X = (2)2 + (-8)2

13      13
X = 4 + 64
13   13
X = 0.3076 + 4.9230


X = 5.2 = 2.3
Degree of freedom = (r-1) (c-1) = 1

For 1 degree of freedom at 5% level of significance, the table value of X2 = 3.84


The calculated value of the X2 is less than the table value (2.3 < 3.84) hence we accept the null hypothesis and reject the alternative hypothesis. We would therefore conclude that budgeting helps in effective planning and control of the financial activities of an organization.


Null hypothesis Ho: Budgeting and budgetary control system serves as useful purpose in terms of coordination and performance evaluation.

Alternative hypothesis Hi: Budgeting and Budgetary control system does not serve a useful purpose in terms of coordination and performance evaluation.

Observed frequency
Expected frequency
From the table above the data will be tested using the chi-square X2 test

X2 = å (O1-E1)2 + å (O1-E1)2
E1                   E2


Where: O = Observed frequency

S = Summation sign

E = Expected frequency


X2 = (12-13)2 + (8-13)2

X = (1)2 + (-5)2

13      13
X = 1 + 25
13   13
X = 0.0769 + 1.9230


X2 – 1.999


X = 5.2 = 2.3
X = 1.41

Degree of freedom = (r-1) (c-1) = 1 for I degree of freedom at 5% level of significance that table value of X = 3.84


The calculated value X2 is less than the table value ie (1.41 < 3.84) hence we accept the null hypothesis that budgeting and budgetary control system serves a useful purpose in terms of coordination and better evaluation and reject the alternative hypothesis.


Null hypothesis Ho: Budgeting Budgetary your company in achieving their financial objective alternative hypothesis Hi: Budgeting do not assists your company in achieving their financial objective.

TABLE 4.10

Observed frequency
Expected frequency
X2 = å (O1-E1)2 + å (O1-E1)2
E1                   E2


X2 = (19-13)2 + (1-13)2

13  13
X = 2.769 + 11.076


X = 13.84
X = 3.72

Degree of freedom = (r-1) (c-1) = 1 for 1 degree of freedom at 5% level of significance that the table value of X2 = 3.84


The calculated value of X2 is less than the table value (3.72 < 3.84) hence.

We accept the null hypothesis and reject the alternative hypothesis. We would therefore conclude that budgeting assist an organization in achieving its financial objectives.






In this chapter, the researcher will attempt to draw some conclusion based on the findings emanating from the study. Furthermore, recommendations shall be put forward as a logical deduction from the empirical situation observed in the course of the study. The recommendations are made with a view to achieving an improvement on the present budget and budgetary and food packaging limited.


On examinations of the answer to the questionnaire, I discovered that the company does not have the principle budget factor. The principal budget factor of the firm were stated as finance limited amount of capital, sales and marketing and production capacity. The lower level of management did not agree that budget serve as an effective means of communication. This they attributed to the fact that, they were not aware of the standards set by the budget or the strategies mapped out for the achievement of such standard of performance. Difference views were expressed as to whom is responsible for approving and preparing the budget. Some respondents where of the view that it was made up of all heads of department. Others opined that it was made up of the system controller, the general manager and members of the board of directors. I gathered that budgetary control reports are distributed weekly. A careful understanding of the principles and concept of budget with respect to rancor food packaging indicates that the level of attainment of the companies objectives would have been low if the budgeting has not been applied. I also gathered that the budgeting techniques in place in the organization is flexible budgeting and that the company’s budget covers a 1 year period.


Having thoroughly understood the essence of budgeting and budgetary control in the organization activity with respect to rancor and food packaging, the researcher deemed it necessary to offer recommendation based on the findings of the research work from the findings, it has discerned that under the present circumstance. Some of the full benefit that would naturally been acquire from the application of this concept have not been explored. The research therefore felt inclined to highlight a number of prescriptions that would allow the company benefit fully from application of this concept in the profit planning system.

The organization should answer that there is a budget committee. The committee should be charged with the responsibilities of advising and controlling all the collected estimated of the various units with votes would need to appear for discussion with a view to agreeing on the estimates earlier submitted. Once the estimates have been agree upon, it would become a propose which will be forwarded to the system is manager for approval.
Revision of the approved budget should be done on timely basis, so that the level of attainment is not jeopardized. This revision should be made to pass through various stage of approval before it is accepted.
The actual level of performance in organizational terms should be compared with the budgeted, and the difference as variance, extracted causes of the variance should be analyzed as being available or unavailable which will call for appropriate corrective action.
Actual performance should be used as a basis for measuring standard in the operation of current budgetary returns. The organization should guide against the preparation of unrealistic budget by ensuring that whatever estimate is approved should reflect the economic condition in the light of the limiting factors.
it should not be made a policy, to base the current year budget on the previous year except if, the economic situation remains unchanged, otherwise accomplishment of the target might be unrealistic.
Finally, budgeting procedures should be used as a means allocating responsibility to officials in the execution of the company’s programmes fault and good result should be traced to individuals or unit who must have contributed to such.

I have attempted to look at budget and budgetary control as a means of achieving organization objectives, and now it is employed in rancor, food and packaging limited Enugu. In going through this work, one would discover that the budget is really a systematic and formalized approach for stating and communicating the firm’s expectation and, accomplishing the planning, coordination and control responsibility of management in such away as to maximize the use of given resource.

The budget process is part of the large system which involves setting objectives, considering alternative programmes, incorporating programmes into the long-range plan and implementing the long-range plan through the budgeting process. Control basically entails the use of long-range plan through the budgeting process. Control basically entails the use of long-range plan through the budget as a standard for performance and the comparison of such set standard with actual performance to discover where actual performance have varied from budget. Where there is effective control, the variable are highlighted and communicated to the manager responsible for the activity area in which the variance has occurred

To achieve control, there has to be clarity in the responsibility of each manager. Cost centre and profit centre should also be identified to necessitate responsibility, accounting periodic comparison should also be made and budget have been discovered. The responsible manager will sit back and examine the report and give reason for the deviation. If the deviation were as a result of setting standards to high the responsible manager would have to sea what could be done to enhance performance.

For a company to reap gains of budget and budgetary control, participation of all cadres of employee is basically essential. Without their input to budget, any standard set by top management may be seen as imposed and would be met with reluctance, if not outright resistance. The inclusion of heads and supervisions of each department and unit into the budgeting is necessary. This they can set standard which are reasonable and attainable.








Welsch Glenn (2000),  Budgeting, profit, planning and control      prentice hall new Delhi.


Warren et al (1999),  Principles of financial and management      accounting, the Guernsy Press.


Peter M. (2002),   Marketing Research Analysis and       management 4th Edition Mac Press.


Onianwa .C. (1996),  Budget and Budgetary Control as a       means of achieving organization aims       IMT Enugu.


Horugreen C.T. (1999),  Introduction to managerial accounting      New Jersey, Prentice Hall International.


Nwakwo .G. (2000),  The Nigeria Financial system Aba 66       Bob Billion publisher.


A workshop on planning and control procedure in the public sector.


Lecture notes on budgeting in public and private sector.


The Nigerian Accountants Journal April/June volume 3 No 2 pp 28-36.


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