What are the disadvantages of budgetary control, Managerial Accounting

Assignment Help:

What are the Disadvantages of budgetary control

1) Uncertain future: the budgets are prepared for the future period. Despite best estimates made for the predictions may not always come true. The future is always uncertain and the situation which is presumed to prevail in future may change. The change in future condition upsets the budgets which have to be prepared on the basis of certain assumptions. The future uncertainties reduce the utility of budgetary reduce the utility of budgetary control system.

2) Budgetary revisions required: budgets are prepared on the assumption that certain condition will prevail. Because of future uncertainties assumed condition may not prevail necessitating the revision of budgetary targets. The frequent revision of targets will reduce the value of begets and revisions involve huge expenditures too.

3) Discourages efficient persons: under budgetary control system the targets are given to every person in the organization. The common tendency of people is to achieve the targets only. There may be some efficient persons who can exceed the targets but they will also feel contented by reaching the targets. So budgets may serve as constraints on managerial initiatives.

4) Problem of co ordination: the success of budgetary control depends upon the co ordination among different departments. The performance of one department affects the results of other departments. To overcome the problem of co ordination a budgetary officer is needed every concern cannot afford to appoint a budgetary officer. The lack of co ordination among different department results in poor performance.

5) Conflict among different departments: budgetary control may lead to conflicts among functional departments. Every department head worries for his department goals without thinking of business goal. Every department tries to get maximum allocations of funds and this raises a among different departments.

6) Depends upon support of top management: budgetary control system depends upon the support of top management. The management should be enthusiastic for the success of this system and should give full support for it. If at any time there is a lack of support from top management then this system will collapse.              

 

 


Related Discussions:- What are the disadvantages of budgetary control

Transaction loans, These loans are given by the Banker for short periods fo...

These loans are given by the Banker for short periods for an exact activity like financing for a civil contract work. As the customer receives payment, the transaction will be repa

Linear programming, what areas can linear programming be applied in manager...

what areas can linear programming be applied in managerial accounting?

LOCKBOX SYSTEM, WHAT IS THE NPV OF ADOPTING THE LOCKBOX SYSTEM

WHAT IS THE NPV OF ADOPTING THE LOCKBOX SYSTEM

Registered pension plan, How much would each be required to contribute to t...

How much would each be required to contribute to the QPP in 2011 based on their $70,000 salaries?   Please show your calculations. How much pension income would each have receiv

Advanced acc, Pike Corporation paid $100,000 for a 10% interest in Salmon C...

Pike Corporation paid $100,000 for a 10% interest in Salmon Corp. on January 1, 2010, when Salmon''s stockholders'' equity consisted of $800,000 of $10 par value common stock and

Mortgages, You want to purchase a house that costs $325,000. You have a dow...

You want to purchase a house that costs $325,000. You have a down payment of $65,000 and will take out a mortgage to make up the difference. The AMC Mortgage Corporation offers a q

Length of operating or working capital cycle, Change of Technology: Change...

Change of Technology: Changes in technology commonly leads to improvements in the efficient processing of raw material, reduce in wastages, more speedy production and higher produ

Funds generated from operations, Funds produced from operations, throughout...

Funds produced from operations, throughout an accounting period, raise working capital by an equivalent amount. The two major components of funds generated from operations are depr

Prepare an estimation of working capital, Prepare an estimation of working ...

Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd