«COMMERCE CLUB STUDY MATERIAL : BUSINESS STUDY XII UNIT- CONTROLLING : 6 MARKS (6, 3+3, 5+1 ) QUESTION BANK 1 MARK QUESTION 1.Which function of ...»
Q4. What is meant by ‘Budgetary Control’? State its any four advantages.
Ans.. Budgetary control is a system which uses budgets as a means of controlling. It means that when different activities of a business enterprise are sought to be controlled with the help of budget, it is called budgetary control.
Advantages of Budgetary Control Helpful in Attaining Organizational Objectives: Budgets are based on (i) plans and all the departmental managers are informed about the expectations each one of them. The departmental managers put in their best efforts to achieve their target and consequently it helps in attaining the organizational objectives.
Source of Motivation for Employees: this technique prescribes the (ii) objectives for the employees. Their performance is matched with the standards. If the results are positive, they are appreciated. This motivates them.
Optimum utilization of Resources: Budgetary Control divides the resources (iii) among all the departments in an appropriate manner. This makes it possible the Optimum utilization of available Resources in the organization.
Achieving Coordination: By implementing this system, the activities of all (iv) the departments are directed towards a single goal. In this way, all the departments work for the attainment of the common goal. Consequently, coordination is established among them.
Facilitates Management by Exception: Management by exception means (v) bringing only the important deviations to the notice of the higher rank managers. Budgetary Control makes every deviation- big or small noticeable.
Small deviations remain confined to the subordinates and a report about the big deviations is sent to higher authorities.