Merits Of Budgetary Control System
“The budgetary control aims at the maximization of profits of the system. To achieve this aim, a proper planning and coordination of different functions is undertaken. The resources are put to the best possible use. ”
The budgetary control system helps in fixing the goals for the organization as a whole and concerted efforts are made for its achievements. It enables economies in enterprise. The budgetary control aims at the maximization of profits of the system. To achieve this aim, a proper planning and coordination of different functions is undertaken. The resources are put to the best possible use.The budget of different departments has a bearing on one another so proper coordination is necessary to achieve budget targets. Budgetary control system takes special interest for this. The top level of a management decides the plans, policies and goals. All efforts are put together to reach the desired goals. Every department is given a target to be achieved. If there is no definite aim then the efforts will be wasted in pursuing different aspirations.
By providing target to every department budgetary control provides a tool for measuring managerial performance. The budget targets are compared to actual results and deviations are determined. The deviation in budgeted and actual performance will enable the determination of weak spots. Efforts are concentrated on those aspects that are creating problems. The performance of each department is reported to the top-level management.
The management will be able to take corrective measures whenever there is a discrepancy in performance. It creates budget consciousness among all employees. By fixing targets for the employee, they are made conscious for their responsibilities. Everybody knows what he is expected to do and he continues his work without an outside disturbance. The planning of expenditure will also be systematic and there will be economy in spending.
The finances will be put to optimum use. The national resources will be used economically to avoid wastage. In the present days competitive world budgetary control system has a significant role to play.
Every entrepreneur tries to reduce the cost of production for increasing sales. Budgetary control system also enables the introduction of incentives schemes of remuneration.
Author - DeeKay
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