P1 Exam Dumps : Management Accounting

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The budget acts as a variable mechanism, with actual results being compared with budget.

Budgeting forces an organization’s management to look ahead and set performance targets.

The budget provides an external benchmark against which performance against which performance can be evaluated.

The budget ensures actions of different parts of the organization are coordinated are reconciled otherwise managers take actions for the benefit of their own part of organization that may not benefit the organization as a whole.

Another benefit of budgeting is to set targets to motivate managers and optimize their performance.

The budget is a useful device of influencing an operator’s thoughts and motivating operators to perform in line with the organization’s marketing budget.

It provides a standard which managers may be motivated to achieve. It can also encourage inefficiency and conflict between managers particularly if the budget is imposed from above, whereby it may act as a threat rather than as a challenge.

It will enable the company to make a direct comparison of costs for each program developed.

It will enable the company to better focus on the quality of its service.

It will provide a system of control.

It will aid the budget setting process.

It will simplify the work-in-progress valuation.