Budgetary controls, Managerial Accounting

BUDGETARY CONTROLS

Control in a business is the process of guiding organization into viable patterns of activity in an environment. The main purpose of a control system is to make sure that the right things get completed. A system like a big organization must be controlled to keep it steady or to enable it to change safely. Control is therefore required because unpredictable disturbances might enter the system so that actual results deviate from the expected results or goals. Examples of such disturbances are entry of a powerful competitor in the market, unexpected increase in cost, a decline in quality standards, failure of a supplier to deliver promised raw material, or the tendency of employees to stop working in order gossip.

To have an efficient control process there has to be a plan, a budget, or a target towards which the system as a whole will be intending. Control is reliant on the receipt and the processing of information both to plan and to compare actual results to the plan so as to judge what control measures, if any, are required.

Posted Date: 12/7/2012 7:48:55 AM | Location : United States







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