BUDGETARY CONTROL
1. Introduction (250)
The word “budget” was come from Latin word “bulga”, meaning a little bag or knapsack (Quinion, 1996). A budget is a detailed plan for the acquisition and use of financial and other resources over a specified time period, while budgeting is the act of preparing a budget (Seal, Garrison and Noreen, 2012). The budget represents future plan which expressed in formal quantitative terms. Budget that is functioned as the firm’s activities control is called budgeting control.
Nowadays, budget is immensely used by companies and organization as a helpful tool to plan and to control organization activities and targets. It allowed managers to communicate their plans and budgets serve as benchmark to evaluate performance, …show more content…
In a year, there were numerous changes that significantly changed the company. Careful planning virtually abolished the issue regarding cash and departments’ goals were synchronised toward predetermined overall company goals. Employees were cautious with the new budgeting system; they become “converted” when they experienced budgeting positive effect. Profits were rose dramatically and internal company’s communication got better as well. A well done goals achievement were appreciated, as one employee said, “For the first time, we know what the company expects of us.” The positive impact from budgetary control is …show more content…
As an example, in their 2004 annual report Nucor Corporation, a steel manufacturer that headquartered in North Carolina, cites some causes of different results compared to its expectations, including the following: (1) Supply and cost of electricity, natural gas, and raw materials, may change unexpectedly; (2) The possibility of changes in steel products’ demand; (3) Competition on imports and substitute materials may intensify; (4) Customer demand can be affected by the uncertainties regarding the global economy; (5) Changes to U.S. and foreign trade policy could alter current exporting and importing activites; and (6) New government regulations may increase environmental compliance cost (Garrison, Noreen and Brewer, 2010). The reasons of static budget revenues and/or cost to differ from actual results could be caused by these
1. Introduction (250)
The word “budget” was come from Latin word “bulga”, meaning a little bag or knapsack (Quinion, 1996). A budget is a detailed plan for the acquisition and use of financial and other resources over a specified time period, while budgeting is the act of preparing a budget (Seal, Garrison and Noreen, 2012). The budget represents future plan which expressed in formal quantitative terms. Budget that is functioned as the firm’s activities control is called budgeting control.
Nowadays, budget is immensely used by companies and organization as a helpful tool to plan and to control organization activities and targets. It allowed managers to communicate their plans and budgets serve as benchmark to evaluate performance, …show more content…
In a year, there were numerous changes that significantly changed the company. Careful planning virtually abolished the issue regarding cash and departments’ goals were synchronised toward predetermined overall company goals. Employees were cautious with the new budgeting system; they become “converted” when they experienced budgeting positive effect. Profits were rose dramatically and internal company’s communication got better as well. A well done goals achievement were appreciated, as one employee said, “For the first time, we know what the company expects of us.” The positive impact from budgetary control is …show more content…
As an example, in their 2004 annual report Nucor Corporation, a steel manufacturer that headquartered in North Carolina, cites some causes of different results compared to its expectations, including the following: (1) Supply and cost of electricity, natural gas, and raw materials, may change unexpectedly; (2) The possibility of changes in steel products’ demand; (3) Competition on imports and substitute materials may intensify; (4) Customer demand can be affected by the uncertainties regarding the global economy; (5) Changes to U.S. and foreign trade policy could alter current exporting and importing activites; and (6) New government regulations may increase environmental compliance cost (Garrison, Noreen and Brewer, 2010). The reasons of static budget revenues and/or cost to differ from actual results could be caused by these