ADVANTAGES OF BUDGETARY CONTROL
The budgetary control system helps in fixing the goals for the organisation as a
whole and concerted efforts are made for its achievements. It enables economies
in the enterprise. Some of the advantages of budgetary control are:
1. MAXIMISATION OF PROFIT:
The budgetary control aims at the maximization of profits of the enterprise. To
achieve this aim, a proper planning and co-ordination of different functions is
undertaken. There is a proper control over various capital and revenue
expenditures. The resources are put to the best possible use.
2. CO-ORDINATION:
The working of different departments and sectors is properly co-ordinated. The
budgets of different departments have a bearing on one another. The co-
ordination of various executives and subordinates in necessary for achieving
budgeted targets.
3. SPECIFIC AIMS:
The plans, policies and goals are decided by the top management. All efforts are
put together to reach the common goal of the organisation. Every department is
given a target to be achieved. The efforts are directed towards achieving some
specific aims. If there is no definite aim then the efforts will be wasted in pursuing
different aims.
4. TOOL FOR MEASURING PERFORMANCE:
By proving targets to various departments, budgetary control provides a tool for
measuring managerial performance. The budgeted targets are compared to actual
results and deviations are determined. The performance of each department is
reported to the top management. This system enables the introduction of
management by exception.
5. ECONOMY:
The planning of expenditure will be systematic and there will be economy in
spending. The finances will be put to optimum use. The benefits derived for the
concern will ultimately extend to industry and then to national economy. The
national resources will be used economically and wastage will be eliminated.
The budgetary control system helps in fixing the goals for the organisation as a
whole and concerted efforts are made for its achievements. It enables economies
in the enterprise. Some of the advantages of budgetary control are:
1. MAXIMISATION OF PROFIT:
The budgetary control aims at the maximization of profits of the enterprise. To
achieve this aim, a proper planning and co-ordination of different functions is
undertaken. There is a proper control over various capital and revenue
expenditures. The resources are put to the best possible use.
2. CO-ORDINATION:
The working of different departments and sectors is properly co-ordinated. The
budgets of different departments have a bearing on one another. The co-
ordination of various executives and subordinates in necessary for achieving
budgeted targets.
3. SPECIFIC AIMS:
The plans, policies and goals are decided by the top management. All efforts are
put together to reach the common goal of the organisation. Every department is
given a target to be achieved. The efforts are directed towards achieving some
specific aims. If there is no definite aim then the efforts will be wasted in pursuing
different aims.
4. TOOL FOR MEASURING PERFORMANCE:
By proving targets to various departments, budgetary control provides a tool for
measuring managerial performance. The budgeted targets are compared to actual
results and deviations are determined. The performance of each department is
reported to the top management. This system enables the introduction of
management by exception.
5. ECONOMY:
The planning of expenditure will be systematic and there will be economy in
spending. The finances will be put to optimum use. The benefits derived for the
concern will ultimately extend to industry and then to national economy. The
national resources will be used economically and wastage will be eliminated.
