CS Executive Budgeting and Budgetary Control as a tool of management

CS Executive Budgeting and Budgetary control as a tool of management

Budgetary control has become a fundamental tool of management for costs and maximizing profits. It may be appreciated as one of the utmost examples of rationality in management. It is a useful management tool for comparing the current performance with pre-planned performance with a view to attaining equilibrium between ends and means, output, and effort. It corrects the deviations from a pre-planned path through the media of observation, research planning, control, and decision-making and thus helps in the performance of future activities in an orderly way. It uncovers un-economies in operations, weaknesses in the organization structure, and minimizes wasteful spending. It acts as a philosopher, friend, and guide to the management.

Its advantages to management can be summarized as follows:

• It brings efficiency and economy in the working of the business enterprise.
• It establishes divisional and departmental responsibilities. It thus prevents ‘buck-passing’ when the budget figures are not met.
• It coordinates the various divisions of a business, namely, the production, financial, marketing, and administrative decisions.
• It guards against undue optimism leading to over-expansion because the targets are fixed by executives, after cool and careful thoughts.

Read More - Budget Control advantages. 

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