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Question:

ogui
ogui
Student

Describe the principle of Budgeting when used as:

1)  a planning tool

2)  a control tool

in management.

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Posted by ogui on Tuesday May 26, 2009 at 2:08 AM and tagged with business, management.

Answers:


  1. marbar57 Teacher
    Elementary / Primary

    eNotes Editor

    Budgeting can be used as a planning tool in management in order to determine the monetary outlay of a business in order to make a profit.  Management needs to determine what their estimated overhead expenses are going to be and how much by using present standards in their particular industry.  They can then project total expenses for their company over a year's time.

    Having determined their projected expenses, they now have solid guidelines to keep their expenses under control.  If they determine during the year that actual costs are at or under projected numbers, they are making a profit.  If, however, actual costs are above estimates, they are losing money and need to make adjustments to bring their costs back down to projected numbers.

    Quite frequently, management has to readjust their budgeted numbers to reflect changing trends in their market or for unexpected and unforeseen events.  In this way, budgeting is a valuable tool for a business to have.

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    Posted by marbar57 on Friday November 27, 2009 at 8:21 AM