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What are the Objectives of budgetary control
1) Planning: planning is an important managerial function. it helps to decide in advance, what to do how to do it when to do it and who is do it. Planning thus helps the managers to anticipate eventualities prepare for contingencies for achieving the ultimate goals. Budget preparation drives the managers to plan ahead. Managers express their operational plan for anticipated business condition. Without a formal procedure of budgetary control many operating managers will not find the time to plan ahead. Thus budgeting is an important planning device.
2) Communication: These employees of an organization should know organization aims objective of sub units (budget centers) and the part that they have to plan for their attainment aims objectives effectively communicate this information to employees. Besides budgets keep different section of the organizational objectives.
3) Coordination: to coordination is to an organization should know organizational aims of a company so as to facilitate its working and is success. Coordination will lead to following results:
4) Motivation: if employment has actively participated in budget preparation and if they are convinced that their personal interests are closely associated with the success of organizational plan budgets provide motivation in the form of goals to be achieved. The budgets will motivate the workers depends purely on how the workers have been mentally and physically included with the process of budgeting.
5) Control: under the system of budgetary control budget forecast is thoroughly discussed and reviewed to be finally approved as functional begets. Afterwards a lot of cuts and adjustment are made to make functional budget fit in the organizational objectives. Then budget formation is followed by a feedback system to pinpoint the extent of variation among actual level of performance and budgeted level of performance. Therefore the inbuilt mechanism of the routine of budgetary control is bound to precipitate to an operational control.
6) Approved plan: a master budget provides an approved summary of results to be expected from proposed plan of operation. It concerns all function of organization and serves as a guide to executives and departmental heads responsible for various departmental objectives.
What is the Flexible budgets A flexible budget consists of a series of budgets for different level of activity. It therefore varies with the level of activity attained. A flex
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