BALANCING AND BUDGETING CONTROL
IN A MANUFACTURING AND MARKETING ORGANIZATION
(A CASE OF STUDY OF TOTAL NIGERIA LTD)
TABLE OF CONTENT
TITLE PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT
CHAPTER ONE:
1.1 INTRODUCTION
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF STUDY
1.4 SIGNIFICANCE OF STUDY
1.5 SCOPE OF THE STUDY
1.6 IMITATIONS OF THIS STUDY
1.7 EFINITION OF TERMS
CHAPTER TWO:
2.1 REVIEWS RELATED TO LITERATURE
2.2
THE CONCEPT OF BUDGETING ANDS BUDGETING CONTROL
2.3
TYPES OF BUDGET
2.4 BUDGET PREPARATION
2.5 ADMINISTRATION OF BUDGET
2.6 HUMAN FACTOR IN BUDGETING
2.7INNOVATION IN BUDGETING
2.8 HISTORICAL BACKGROUND OF TOTAL NIGERIA LTD
CHAPTER THREE
RESEARCG METHODOLOGY
3.1 INTRODUCTION
3.2 RESEARCH DESIGN
3.3 PRIMARY SOURCE OF DATA
3.4 POPULATION
3.5 SAMPLE TECHNIQUES
3. 6 SAMPLE SIZE
3.7 REMARKS
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION
4.1
PRESENTATION OF RELATED DATA
4.2 METHOD OF DATA ANALYSIS
4.3 ANALYSIS OF RELATED DATA
4.4 TESTING OF THE HYPOTHESIS
CHAPTER FIVE
SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 SAMMRY OF THE FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATION
BIBLIOGRAPHY
APPENDIX / QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
HISTORY OVERVIEW:
The use of budget in
government long preceded its application in business or the business sector. In
the stable economic environment of the period before world war, few large
companies in U.S.A and U.K used budgets. The result of the use of budget
conflicted, some pioneer companies reported it was a significant tool to
management but reported it has an ill or even a negative effect on efficiency
and productivity. In order to avoid the conflicting result of the large segment
still straddled the fence awaiting further information and a more definite
result. The world depression of the 1929 and its attendant business worries and
trouble made the use of budgeting imperative in order to plane the growth of the
enterprise. The population of budgeting was the direct outcome of two inquiries
conducted to assess the benefit or otherwise as budget as applied of for the
industry. The national industrial conference board sat in U.S.A while the
international management institute worked in Geneva. Both were inaugurated in 1930.
The concept of business
budgeting is even more resent in Nigeria. It was introduced by the
first foreign multinational that operated in Nigeria and gradually a small firm
adopted it.
The ultimate
goal of any business organization is to maximize profit, which can result fo4rm
the management conscious effort to increase sale/render efficient service and
reduce cost. In the attainment of this subsidiary goal, management must have a
careful prepared and articulated business and organizational plane, a rational
plane commitment of the scarce resources and a thorough scanning of the
environment in which it exist. In the other word, the enterprise was plane and
controls its operation for the attainment of the organizational goal.
In a total
business environment, business operation is complex and subject to heavy
competitive pressure. In such an environment, many kinds of charge occur like
frustration in the economy, which call for adjustment in the enterprise. In
addition, the ingestible find are scarcer and the cost of such fund is
estimably prohibitive. All this complexity put a wedge between business form
and attainment of its set objective. But the firm must take a positive action
in regarded to the difficulties in order not to go under. The firm must plane
ahead. Planning ahead entailed articulation of cooperate mission, determine
where a firm is at the moment, deciding on where it want to go and how fast,
how to get there and what to do along the way to reduce uncertainty and to
mange the risk and changes. Planning ahead entails internal scanning to
determine the enterprise strength and weakness which can provide the management
with a better understanding of the firm operation n relation to the general environment
which increase understanding and leading to a faster reaction of the unfolding
events.
Environmental
scanning is also carried out which form the basis for the environmental
assumption. The business objective must by clearly set out and disseminated t
all level of business organization and management, personnel effectively
sensitized towards their achievement also essential is the internal
co-ordination of the personnel and function. But most importantly, the
enterprise must forecast its need for fund over a giving period of time, secure
them on very competitive terms and utilize the fund in the most rational ways.
Indeed the
survival of modern business involve wise management even more than that, it
needs scientific technique and such technique of the budgeting and budgeting
control, variance accounting and other high Techniquecal forecasting device
have all come to the aid of management to increase the performance of the firm.
Budget according to
management of institute of chattered accounting (CIMA) is simply a plane
management of money and which is prepared and improve prior to the budget and
may show under the expenditure and capital employed. On ht other hand,
institute of certified management of accountant define it as a financial
statement prepared and approve prior to the define period of time of the policy
to be pursued during that period for the purpose of archiving a set objective.
It serves as a quantitative expression of a planed action and can aid in
coordination and implementation. It could be formulated of the organization as
a whole or for a small sub – unit.
Once a budget
has been prepared and is approved, its usefulness depends upon the wiliness of
the company executive to follow up to determine if the cost are been controlled
and if the desired income is been earned in accordance with he plane of the
operation.
Controlling
operating involves management in a number of processes and requires several
different kinds of information. It involves converting to management planes
into an operating pattern w8ich match the planes into which a company is
divided. This change the overall detailed lane into an operating plane, which
rates to the management structure of the company, and this thus leads to
budgeting
Budgets are drowned up for
control purpose. It ia an attempt to control the direction and plane the
company is taking. This brings up the issue of budgeting control. Budgeting
control is the means of deterring the extent to, which the planed goal and
objective are attain. It involves assigning responsibilities for the
achievement of the budget, measuring the actual performance and compare them
with the estimate. Control ensures that the action is taking where necessary
and possible to reduce the gap between budgeting and actual performance. That
entails taking action in variance and close supervision of the workers in the
organization.
Budgeting
control can also be said to be the use of budget for assigning responsibility,
planning and controlling performance and guiding the managerial and other
activities of the firm toward the achievement of the organizational objective
STATEMENT OF THE PROBLEMS
In the light
of the confusion tumult of the modern business as identified and describe
above, some firm have gone under while the others are just managing to exist.
It is however interesting phenomena that yet other enterprise does not survive
only but go ahead to make super profit. This detail point out to the fact that
companies should solves their problem in different ways, which in turn account
for success or failure of such firm. Total oil Nigeria plc, the focal point of
this study started operation (20) twenty years ago. It was formally a
subsidiary of the French multinational company with head quarters in Paris but now in Merger
and is now known as the total fianelf. The business of the total oil is the
marketing of petroleum and manufacturing and sale of lubricants. Its overriding
business objective is maximization of profit. The oil and gas industry is a
high-risk business where distribution has not control over price level which is
inturn subjected to violent fluctuation.
Amid this
vagaries, total oil has continue to make stable progress as judged by the
parameter of profit over the years, what specific strategies are employed by
total oil to guarantee profit
OBJECTIVE OF THE STUDY
The main
objective of the study is to examine the organizational structure, the
management and financial tool of total oil to assertion;
1. Whether profitability is
the direct result of proper budgeting and budgeting control
2. Dose the beget makes
possible congruence and co-ordination of the department effort.
3. Is the company reward
penalties based directly on variance
Hypothesis
Hi: budgeting are effective guide to business growth
1. Ho: budgeting are means to
control and synchrony organization personnel’s and function
2. Ho: budget are more
effective when reward/penalties are based on goal attainment
3. Hi: budget is more effect
when reward/penalties are not based on goal attainment.
SCOPE AND LIMITATION OF THE STUDY
This study is
a five years trend analysis (1993 – 1997) although it is aimed at determines
the quality if budget and budgetary control in the company over the period.
This study will not take a detailed look of the companies budget schedules. The
financial statement only will be used. The natures of the research situating
sometimes impose some limitation on the work of the researcher. This limitation
are listed below
1. Owing to the use of
convenience sample the generalization made in this study are restricted to the
interviewees and those responding to the questionnaire. The researcher has no
way of determining the amount of bias introduced by the respondent and note
what amount of reliability will be place on the answer giving
2. Time: the short time available
has severally limited the depth and the quality of this study
3. Non-response: not every
person to whom questionnaire was distributed to respond to them. And it was not
in all case that response was given to all the questions contained in the questionnaire.
The effect of all this is to reduce the representation of the findings.
DEFINITION OF TERMS
1. Budget: this s
quantitative expression of plane of action and an aid to co-ordination and
implementation
2. Budgetary control: it is
the establishment of budgeting relating to the responsibility of the executives
to the requirement of policy and continues the comparison either to secure by
an individual action the objective of that policy or provide a basis for its
revision.
3. Data: can be defining as a
fact observed or information in isolation and relating to the subject of the
research.
4. Financial statement: these
are report on management responsibility over the resources of the organization
as a whole.
5. Fixed cost: this are cost
that dose vary in direct proportion to the production volume archived.
6. Financial tool: this are
instrument used by the company
7. Hypothesis: are the ideas
believes or assumption put forward by anyone for the purpose of helping and
guiding him in arriving at a reasonable conclusion.
8. Model: is define a
simplified presentation of a real phenomenon
9. Population is the totality
of cases (item) in a giving investigation
10.
Penny pending: find it difficult to spend money in order to
cut down cost.
11.
Profit: this is define as surpluses giving to the owners of
the business as a result of a successful trading
12.
Pioneer company: it is a company which has been legally
issued with a pioneer certificate
13.
Questionnaire: a list of question elating to the aim of the
study and hypothesis to be verified to which the respondent is required to
answer by writing his response.
14.
Relevant range: this is the range within which fixed cost is
accepted or used
15.
Sample size: this is a process through which a proportion of
a population is selected for the study
16.
Variance is a different between standard cost and.
17.
Variance cost, these are overhead costs that vary in direct
proportion to the overhead production values archived.