BMGT 221 Chapter Notes - Chapter 8: Budget, Income Statement, Finished Good
22 Apr 2016
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Document Summary
Budgets force managers to think about and plan for the future. In the absence of the necessity to prepare a budget, many managers would spend all of their time dealing with day-to-day emergencies. The budgeting process provides a means of allocating resources to those parts of the organization where they can be used most effectively. The budgeting process can uncover potential bottlenecks before they occur. Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction. Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance. A manager should be help responsible for those items, and only those items, that the manager can actually control to a significant extent. Each line item in the budget is the responsibility of a manger who is held responsible for subsequent deviations between budgeted goals and actual results.
