ICANManagement InformationBudgeting and Budgetary Control2021

Kano Textiles Limited operates a system of budgetary control. At the end of March 2024, the budget committee reviews a report showing that the sales manager's department spent ₦3,200,000 against a budget of ₦2,900,000. Which principle of budgetary control does this BEST illustrate?

AResponsibility accounting, where costs are reported against the manager accountable for themCORRECT
BActivity-based costing, where costs are traced to specific cost drivers
CStandard costing, where pre-determined costs are set for each unit of output
DMarginal costing, where only variable costs are assigned to cost centres
AI
Toaster Teacher
Why the answer is A, and why the others tempt you.
Budgetary control relies on responsibility accounting, which assigns costs and revenues to the manager who has authority and accountability over them, enabling performance evaluation through comparison of actual versus budgeted figures. The scenario describes a departmental cost report reviewed against a budget — the hallmark of responsibility accounting. Activity-based costing, standard costing and marginal costing are distinct costing techniques not directly illustrated by this scenario.
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