Budgeting Assignment Essay Example | Topics and Well Written Essays - 1500 words

Budgeting Assignment - Essay Example ndividual budget estimates, Suggesting revisions in individual budget estimates ,Approval of budget and later revisions., Receiving and analyzing budget reports, recommendations of actions needed and designed to improve efficiency where necessary. Cumulative efforts are made at all levels , at the decision making process for establishing targets and making estimates and at the implementation phase also when the budgeted target has to be achieved. Otley (1999) suggests that the budgetary control process provides an encompassing framework through which all aspects of an organization’s activity are summed up into a single set of financial statements but at the same time It acts as a valuable source of monitoring the actual outcomes with the budgeted and also helps to identify and eliminate the inefficiencies in an organization performance, for example. In some type of businesses where there is rapid change in current environment conditions because of any economic or social factors, frequent budget changes are avoided because budget revision are considered as time consuming and loss in budgetary control. It’s difficult to avoid the inevitable distorting effects arisen when managers are rewarded for achieving the budget targets. This can be reduced by giving some proper and justified incentive schemes like bonuses or overtime premium or any other reward system to the subordinates. It should be kept in mind that it is the overall collective team effort and the usually the pressure is usually taken by the middle and lower level management to meet the targeted goals. For example preparation of purchase budget can never be made without the production budget in any manufacturing concern. The purchase department must know the targeted production in order to estimate the amount and qty of raw material required for the finished goods. Similarly, the sales budget is a prerequisite of making a production budget because the production department must be aware