Title: Budgetary Planning and Control
Course: BAC300: Management Accounting I (PEBL) > Section: LESSON TWELVE: Budgetary Planning and Control

1.1  Introduction

In this first lesson, we lay the foundation for the entire course by defining the concept entrepreneurship and other related terms. Throughout our teaching experiences, we have found that an understanding of the basic principles behind the subject and their applications increases the students’ motivation for the subject. We therefore introduce you to the theories upon which entrepreneurship study is based and encourage you to engage in in-depth discussions of these concepts and theories. Since the term entrepreneurship is closely associated with small businesses, we introduce the concept of small business too. The purpose of this lesson is to enable you understand fundamental concepts and theories of entrepreneurship.

12.1 Introduction

Lesson-level overview | Lesson/week/section | 12
Lesson name: | Budgetary Planning and Control
Aim of the lesson: | This lesson aims at helping you acquire knowledge and skills of preparing budgets for organizations
This lesson covers:
- Budget setting process
- Preparation of budgets
- Analysis of budgetary control
Intended learning outcomes:
At the end of this lesson, you will be able to:

1. Explain the budget setting process
2. Prepare budgets
3. Analyse budgetary control

Overview of student activity:
1.Pre-lesson activity – working in tutorial groups to highlight key steps in the budget setting process

2. Face to face class presentation by group leaders highlighting key steps in the budget setting process

3. Engaging in e-tivities 12.1, 12.2, 12.3 that involves reading linked resources and watching videos on budget setting process, preparing a cash budget and analysing budgetary controls

3.  Interactions on the discussion forums and answering the given questions.

Constructive alignment of lesson level outcomes with module level outcomes, learning activities and assessment

(Pressing <Tab> at the end of the table will provide additional rows in the table, if required.)
Intended Lesson learning outcomes: | No of module-level outcome | Activity where students engage with this outcome | Where and how is this outcome assessed?
At the end of this lesson, you will be able to:
Explain budget setting process | 5 | 12.1 | 12.1 (a) and (b) Essay questions
Prepare budgets | 5 | 12.2 | 12.2 (a),(b)and (c) Calculation questions
Analyse budgetary control | 5 | 12.3 | 12.2 (a) and (b) Essay questions

Detailed explanation of ALL student and teacher engagement with the Lesson:

(This should be presented in the order that the activities take place.  So if students do work online before coming to the lecture, that should be shown ahead of what happens in class.

If there is more than one opportunity for face-to-face contact, or more than one online task, there should be a separate section for each instance, and they should be presented in the template in the same order that students encounter them.)

Content – such as lecture material – can EITHER be shown here OR added as clearly identifiable addenda to the document.  If you plan to use addenda, you should ensure that these are cross-referenced in this section.)
Module-level outcomes addressed:
Lesson twelve addresses module learning outcome 5 - recommend management accounting decisions to management
Purpose of the lesson/week/section:
This lesson introduces you to the budget setting process, preparation of budget and budgetary controls.
Over to you: (a description of the process of the section)
This lesson will start with a pre-lesson activity where you will work in tutorial groups to highlight key steps in the budget setting process. Thereafter, you will explain the budget setting process, prepare a cash budget and analyse budgetary controls in e-tivities 12.1, 12.2 and 12.3 respectively.
Pre-lesson activity: | Number of hours | 1
Read budget setting process and in the tutorial groups, highlight  the key steps
Face to face time: (if applicable) | Number of hours | 1
a) Explain the learning outcomes

b) Explain the link between the previous lesson and the current one

c) Introduce the budgeting process, cash budget,  fixed and flexible budgets and   the budgetary control

E-tivity 12.1

Online activity: | Number of hours | 1
What should students do?
E-tivity 12.1

Using the figure above and notes on pre-lesson activity.  Read more on resource 1 and resource 2 on page 365 to 373 and then;

(a) Explain the budget setting process.

(b) Outline the key steps in budget setting process.

(c) Explain the similarities between budgeting process and decision making process,

Once you have posted your answers on the discussion forum, read what three of your colleagues in the tutorial group have posted and note key point in the budget setting process. Add any new point to your notes.
Where do they do it? | On the discussion forum 12.1
By when should they do it? | Before the next lesson.
E-moderator/tutor role
Ensure that learners are focused on the contents and context of discussion and Provide feedback on e-tivity 12.1 tasks.
How are the learning outcomes in this lesson assessed? | Number of hours | 1
Essay questions
How does this section link to other sections of the module?
It is the introductory lesson on budgetary planning and control and forms the basis for budgetary preparation.

E-tivity 12.2

= Total number of hours | 4 |
Online activity: | Number of hours | 1
What should students do?
E-tivity 12.2

Read resources 1 (chapter 7.3), 2 (chapter 9.2) and watch video and then answer the following questions:

(a) ABC Limited manufactures three types of products which are used in boosting human immune system. The budgeted sales of the products known as A, B and C. are as follows:

Product Output Price (sh.)

A 6,000 120

B 9,000 150

C 8,000 180

The inventories of those products are as under:

Product Opening inventories Closing inventories

A 2,500 2,000

B 3,000 1,500

C 2,000 1,000

You are required to prepare:

(i) Sales budget

(ii) Production budget

(b) Lakes Limited sells lenses for sh.45 each and is estimating sales of 15,000 units in January and 18,000 in February. Each lens consists of 2 kilograms of silicon costing sh. 2.50 per kilograms, 3 litres of solution costing sh.3 per litre, and 30 minutes of direct labour rate of sh. 18 per hour. Desired inventory levels are:

 | Jan.31 | Feb. 28 | Mar. 31
Beginning inventory finished goods | 4,500 | 4,900 | 5,000
Direct materials: silicon | 8,500 | 9,100 | 9,200
Direct materials: solution | 11,200 | 12,000 | 13,000

You are required to prepare:

(i) Sales budget

(ii) Production budget

(iii) Direct material budget for silicon and solution

(iv) Direct labour budget

(c) From the following information extracted from the financial books of Kitengela Limited, prepare a month by month cash budge from July 20XX to December 20XX.

- Trading budget     sh. 000  sh. 000

Sales (Cash received one in arrears)     9,600

Cost of sales:

Paid one month in arrears 7,200

Paid in the month the of purchase 1,152

Depreciation 576 8,928

Gross profit 672

- Capital budget

Payment of new plant              sh. 000

July         96

August       200

September       104

November     400

Increase in stock     160

Total 560

- New issue shares in October      240
- Statement of financial position as at 1^st July,20XX

Assets sh. 000

Fixed assets  5,760

Stock      800

Debtors                 1,680

Cash 320

Total Assets 8,560

Capital and Liabilities

Capital and reserves    6,840

Taxation payable in December 20XX       440

Creditors 1,280

Total Capital and Liabilities 8,560

(d) Explain how to construct flexible budgets.

(e) Once you have posted your answers on the discussion forum, read what three of your colleagues in the tutorial group have posted and verify your answers and make corrections to your answer if necessary.
Where do they do it? | On the discussion forum 12.2
By when should they do it? | Before the next lesson
E-moderator/tutor role
Ensure that learners are focused on the contents and context of discussion.

Stimulate further learning and generation of new ideas.

Provide feedback on e-tivity 12.2 tasks.
How are the learning outcomes in this lesson assessed? | Number of hours | 1
Computational questions
How does this section link to other sections of the module?
It is a continuation lesson on budgetary planning and control and forms the basis for further interactions in e-tivity 12.3.

E-tivity 12.3

Online activity: | Number of hours | 1
What should students do?
E-tivity 12.3

Review material provided on the, link1  chapter 9 and link2 chapter 7 and watch the video ,and then:

(a) Analyze budgetary control process.

(b) Once you have posted your answers on the discussion forum, read what three of your colleagues in the tutorial group have posted and note key point in the budgetary control process. Add any new point to your notes.
Where do they do it? | On the discussion forum 12.3
By when should they do it? | Before the end of semester.
E-moderator/tutor role
Ensure that learners are focused on the contents and context of discussion.

Stimulate further learning and generation of new ideas.

Provide feedback on e-tivity 12.3 tasks.
How are the learning outcomes in this Lesson assessed? | Number of hours | 1
Essay questions
How does this section link to other sections of the module?
This section wraps up the entire course by explaining how budgeting forms the basis for financial decisions making in organizations which was the broad aim of the course

Some important questions

Which learning resources/ references will scaffold the students’ learning?
1. MitchelL, F., Moyne, C. Patty, G. & Dixon, C. (2019) Principles of accounting, Vol   2:managerial accounting, OpenStax , Houston, Texas . Retrieved from:https://d3bxy9euw4e147.cloudfront.net/oscms-prodcms/media/documents/ManagerialAccounting-OP_x3x7rSO.pdf, chapter 7
2. Kurt, H., Sierra, C. Joe, & H. (2012) Managerial accounting, Saylor Foundation,  How Are Operating Budgets Created? (saylordotorg.github.io) chapter 9
3. Nptelhrd (2015) Budget and Budgetary control, retrieved from https://www.youtube.com/watch?v=0OJ2PIGiwJE.
How are students enabled to access the resources? | Resources are shared in the module that is loaded in the Learning Management System (LMS) and all students have access to it. The same module is placed on the OER Africa website.
Where in this lesson are students expected to work collaboratively? | Discussion forum 12.1,12.2 and 12.3
How has an inclusive approach been incorporated in this lesson? | a) Use of multimedia resources in the module and differentiated learning activities. b) Use university computer labs, all resources are downloadable for offline use and discounted data bundles are available to students. c) Use of accessibility button for learners with special needs on the LMS.
How will feedback on lesson be obtained from students? | Through the posts in the discussion forum 12.1, 12,2 and 12.3 as well as the face to face class
How will student feedback be used to improve lesson? | By incorporating suggestions in the course for the current and subsequent cohorts.
At which point(s) will students receive formative feedback on the work they have done in the lesson? | Before the next session.