Well run companies usually prepare budgets in advance to help set product prizes and to plan for materials, labor and other expenditures to run the operations successfully.

• Describe in general terms how, when, and why budgets also can be used as part of a company's internal controls.
• Choose and list one example of a specific cost component of a budget. Describe how the budget could be used as a control feauture and also how it could be used to have an internal control impact.