Advantages And Disadvantages Of Budgeting

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Wants are numerous while assets are restricted yet there is each plausibility to squander or under-use the limited resources by the human factor which takes part in the creation of goods and services. The budget is a major instrument for the implementation of policies, procedures, principles, plans and objectives in monetary and quantitative values. The administration of an organization is viewed as proficient on the off chance that it can satisfy the objectives of the organization. In perspective of this, there is each need to do a practical arranging of the exercises of the firm contemplating the restricting variables and the long haul destinations of the firm. Keeping in mind the end goal to accomplish this, budgeting – a tool of planning…show more content…
According to (Hilton, Maher and Selto, 2003) the procedure of planning and making choices for the organization is called budgeting. It can be expressed that administration control through budget is expected to guarantee that the organization accomplishes its goals once settled upon. Plans ought to be drawn up so that effort can be directed towards the closures determined in the objectives. At the point when arrangements are communicated quantitatively, it is known as a budget and the procedure of changing over plans into budget is known as budgeting. Budgeting is a financial tool utilized by most organizations to accomplish their pre-determined objectives which involves legitimate planning, co-ordination and control. Each personnel in an organization must take an interest completely and comprehend the requirement for their contribution in a decent budgetary control. Budgeting is an instrument of management and not a substitute for management. This helps in co-ordination of all divisions and follows up constantly for profit making and success of the…show more content…
b) The budgetary control system in the organisation puts a dictate authority in the management and this negates motivation of employees. c) They record waste in production due to poor operation of budgetary control, thereby affecting profitability negatively. d) They operate a fixed budget which has not helped in the maximum utilization of resources for production. 1.3 OBJECTIVE OF THE STUDY The objectives of this study include the following; a) To enhance the production capacity of the manufacturing company. b) To expand how budgeting fits into the whole structure of decision making, planning and control. c) To inspect the strategy of budgetary control. d) To guarantee that all departments are really and effectively included in the preparations of the budget. e) To see whether budgetary control improves powerful examination between the actual performances with the budget. 1.4 RESEARCH QUESTIONS It is pertinent to state the research questions as follows; a) Is the preparation of a budget an effective tool for planning and control in an

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