Planning and Control- Budgeting

Management and cost accounting requires the accumulation of costs for a number of different purposes, i.e. stock valuation and profit measurement, decision making and planning and control.

The budgeting process has been traditionally used to plan an organisations activities into the future. A budget can be described as an approved financial plan, reflecting expectations for a defined, future period of time. Budgets also serve an as important framework for performance evaluation and control by holding individuals and managers accountable for prescribed targets.

The preparation of budgets is a lengthy process which requires great care if the ultimate master budget is to be useful for the purposes of management control within an organisation. If this is done properly however it can be hugely beneficial.

question - Explain the reasons for an organization to produce budgets, the steps the need to be followed in the planning and budgetary process and the benefits that can accrue from successful budget implementation.